The Pensions Regulator has recently announced its plan to boost its auto-enrolment compliance inspections that had largely paused during the pandemic. With the lifting of social distancing restrictions, the Regulator is now eager to use its physical presence to ensure the momentum of the auto-enrolment regime continues and to protect savers where necessary.
Spot checks will target in particular those employers who have failed to pay correct auto-enrolment contributions, as well as those who have breached their other auto-enrolment duties. The employers at risk of becoming non-complaint will also fall within scope of the inspections. The Regulator mentions that it already has access to a range of information which helps it to detect non-compliance (for example RTI data shared by HMRC, alerts from pension schemes, whistleblowing reports from individuals, and 'other information and intelligence').
The Regulator's ability to carry out spot checks is part of the suite of information gathering powers given to it under the Pensions Act 2004. Inspectors visiting premises will have the power to require anyone on the employer's premises to provide documents or information held in electronic form for inspection, to take them away or make copies, and to speak to anyone on the premises where the Regulator has reasonable cause to believe they can provide relevant information.
The primary aim of the drive isn’t to catch employers out rather the Regulator states: "our priority is to make sure they become compliant.", though this may entail tougher enforcement action against employers "where appropriate". The Regulator expects the inspections will allow it to identify common errors and that "[I]n most cases, TPR inspectors work on site with employers found to be non-compliant to help get them back on track." While the Regulator will usually notify employers two weeks in advance that an inspection will happen, we have been able to confirm that spot checks will also include unannounced visits. The announcement may itself serve as a heads up to employers to review internal processes where this has not been done for some time.
The Regulator's statutory inspection powers are given bite in the form of a raft of penalties to help ensure inspectors are physically able to carry out their functions. A person who intentionally or without reasonable excuse alters, suppresses, conceals or destroys a document may also be liable to prosecution, resulting in a fine or imprisonment of up to two years or both.
While not restricting itself to any particular location, confirming that inspections will be carried out in a number of regions in the UK, the Regulator has notably named Greater Manchester, Nottingham, Greater London and Belfast as within scope. Regardless of location, it is always good practice for employers to be alive to any auto enrolment compliance issues and to ensure their records are in order so that, if faced with a knock at the door from the Regulator, they are primed to comply with information requests (and seek legal support as necessary).
