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Pensions Regulator will target non-compliant sectors with audits 12 June 2013

Esslemont: Will take a proportional approach

Speaking at a Payroll World Pensions Auto-Enrolment Seminar last week Neil Esslemont, head of industry liaison at TPR, said that as well as financial penalties TPR has powers to carry out audits of companies and even whole industry sectors where a reputation for poor compliance of employment legislation has been observed previously.

“If we have reason to do so, we can come and do an audit,” Esselmont said. “Reasonable grounds may be as a result of proactive research. I cannot name an industry but you can probably guess yourself that there are some where perhaps the culture within that industry might lead towards a trend of non-compliance with other regulation, such as the working time directive or national minimum wage.”

There has been some indication that certain employers may attempt to circumvent AE legislation. For example an anonymous respondent to a recent survey carried out by the Institute of Directors on auto-enrolment, said: “We will not be spending any money doing something that we do not want to do. Catch us if you can.”

Regulators teeth

The regulator is able to issue fines, to large employers, of as much as £10,000-a-day for “deliberate” non-compliance with AE legislation.

Esslemont said: “We will take a proportional approach so, for minor problems, there will be relatively minor penalties, but for major - particularly deliberate non-compliance - then there’s going to be a higher penalty associated with it.”

However as the regulator is an independent body separate of government it does not form, but only interprets legislation.

“While we are aware of what the government policy intent is, our duty is to interpret the legislation and the law to minimise non-compliance,” Esslemont said. “That means as the regulator, it is our interpretation that is likely to be more appropriate than anyone else’s interpretation – except the courts, who will finally determine any unclear areas as we see future case law get resolved.”

Although parts of the legislation, according to Esslemont, are “sufficiently complex and unclear that even TPR cannot give real guidance”, the regulator will nonetheless be responsible for issuing penalties to non-compliant employers.

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