Only 57 percent of UK employers are ‘very confident’ that their workplace pension schemes comply with automatic enrolment (AE) regulations, suggesting that many organisations may be at risk of breaching pension obligations.
That’s according to research from Towergate Employee Benefits. Automatic enrolment, introduced over a decade ago, requires employers to provide a workplace pension, enrol eligible staff automatically and contribute to their pension pots.
Although the concept is widely known, a number of employers still appear unclear on the practical requirements. Changes in personnel or internal processes may have left gaps in expertise or oversight, particularly where AE responsibilities have shifted departments.
Sorangi Shah, client director at Towergate Employee Benefits, said, “Auto-enrolment is designed to make it easy for employees to benefit from a pension, but employers need to fully understand the regulations and know who is eligible and how much to contribute, otherwise they may be at risk of non-compliance.”
The Pensions Regulator (TPR) has the authority to issue compliance notices and impose fines for breaches. Employers are expected to manage the entire process, including calculating contributions, setting up payroll integration and communicating with staff. A failure in any of these areas may result in penalties or missed obligations.
Knowledge gaps in compliance processes
AE regulations require more than initial enrolment. Employers must also declare their compliance with TPR and maintain ongoing duties such as informing employees of any changes in age or earnings that affect their eligibility. Every three years, they are also required to re-enrol staff who have opted out or are contributing below the minimum threshold.
Categories such as eligible, entitled and non-eligible employees can change over time, depending on employment status and salary levels. This complexity may contribute to why many employers fall short of feeling fully confident in their scheme’s compliance. Shah noted that employers are often unaware of how these categories work and what is required for each group.
When Towergate’s pension specialists conduct scheme health-checks, they regularly find missing or incomplete statutory communications. These communications are essential in notifying employees of their enrolment rights and opt-out options. Confusion between probation periods and statutory postponement rules are frequent occurrences, as are misunderstandings around opt-in rights during the postponement window.
Common errors found in workplace pension schemes
Towergate’s assessments often reveal errors in completing pension certificates, particularly among employers who do not use qualifying earnings as the basis for calculating contributions. For these employers, certificates are mandatory and serve to confirm compliance when using alternative methods.
Re-enrolment procedures also appear to be a weak spot. Shah explained that many employers either neglect to complete re-enrolment entirely or do so incorrectly, potentially leading to a breach of legal requirements. This part of AE, while routine, can easily be missed or mishandled without proper oversight.
Shah added, “With little over half of employers feeling very confident that they are fully compliant with the auto-enrolment regulations, it is important to take advice from a pension professional and consider having a pension health-check.”
