The Pensions Regulator (TPR) has set out its strategy for tackling non-compliance with the changes to pensions law, revealing they will use fines and other measures to make sure all UK companies comply with the new rules on auto-enrolment.

The regulator says it will provide enough information and support so that employers know what they need to do to fulfill their new duties and enable them to take action at the right time.However, TPR will adopt a hard line with those employers who fail to comply and say they may be subject to statutory notices, penalties or escalating fines.

From July this year all employers will also be banned from offering incentives to their workers to opt out of an auto-enrolment pension.This will include refusing to employ someone because they want to join the company pension scheme.The regulator says it will consider using powers against employers where there is evidence of this behaviour. A whistleblowing facility, through which confidential reports of suspected non-compliance can be made, will be set up by the regulator to detect these practices – more details on this are expected to be released early July.

The regulator will have the power to issue a fixed penalty of £400 to an employer, as well as escalating the penalty at a daily rate.Escalating (daily) penalties are set at a level to fine an employer the cash flow benefit they are getting by not complying so that there is no financial benefit in not complying.

TPR's chief executive, Bill Galvin, said: "Every employer needs to play their part to make these pension reforms work. For those that do not engage we want to make it clear there are consequences. We'll apply the law fairly and where we find consistent or willful non-compliance we will use our powers, so that employees do not miss out on contributions they are due."

Executive director for employer compliance at TPR, Charles Counsell, said that thought the regulator is supporting employers every step of the way, they will take action where they "see persistent or intentional non-compliance."

Employers can already find out what to do by using the regulator's online interactive tools.Furthermore, the regulator also has specific technicalguidance for advisers, accountants, IFAs and payroll professionals – so they can help their clients comply.

First published 21.06.2012

azeevalkink@wilmington.co.uk