Auto Enrolment Penalties

Enforced by the Pension Regulator with assistance from HMRC

Key points

  • The responsibility for complying rests with the employer.
  • If you don’t comply, you’ll face enforcement action in line with a risk-based approach.
  • Enforcement action starts with statutory notices and is followed by penalty notices, which may result in court action.

What happens if I don’t comply?

  • The Pension regulator will investigate breaches of the law in a fair and objective manner.
  • They can issue formal notices requesting information and can carry out inspections.
  • They will effectively enforce against non-compliance and have a range of civil and criminal enforcement measures at their disposal.

Enforcement options:

Non-statutory action

The Pension regulator can issue guidance and instruction by telephone, email, letter and in person. They will send a warning letter confirming a set time frame for compliance with the duties.

Statutory notices

Statutory notices can direct you to comply with your duties and / or pay any contributions you have missed or are late in paying. The Pension regulator have further discretionary powers which allow them to estimate and charge interest on unpaid contributions and direct you to calculate and / or pay unpaid contributions.

Penalty notices

The Pension regulator can issue penalty notices to punish persistent and deliberate non-compliance.

A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period.

They can also issue an escalating penalty notice for failure to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on the number of staff you have.

They can issue a civil penalty for cases where you fail to pay contributions due. This is a financial penalty of up to £5,000 for individuals and up to £50,000 for organisations.

Where employers fail to comply with a compliance notice or there is evidence of a breach, the Pension regulator can issue a prohibited recruitment conduct penalty notice. This is currently set at a maximum fixed daily rate of £5,000 for organisations with over 250 staff.

Court action

The Pension regulator can take civil action through the court to recover penalties.

Employers who deliberately and wilfully fail to not comply with their duties may be prosecuted.

The Pension regulator can also confiscate goods where there is a criminal conviction and restrain assets during criminal investigations.

The Pension regulator aim to fully recover all the penalties that they issue.

Please contact our Payroll team if you have any concerns or call 0161 249 5040