What types of businesses make declaration of compliance errors?
The declaration of compliance needs to be done within five months of the staging date but it is the duty that businesses seem to fail to do. One reason is that it is not clear who will complete the declaration – the adviser or clients?
A business must complete and submit a declaration of compliance so that The Pensions Regulator knows what actions the business has taken to meet its automatic enrolment duties. The latest Compliance and Enforcement Bulletin from the Pensions Regulator gives details of the number of times the Regulator has used its powers and has fined businesses. Two examples stand out, with each employer being fined:
A garage owner failed to complete a declaration of compliance as they thought a staff member had done it.
The employer was a small independent garage owner who failed to complete their declaration of compliance or respond to the Compliance Notice we subsequently issued. As a result of this inaction, we then gave them a Fixed Penalty Notice (FPN) of £400, with a deadline of 28 days to pay. The employer asked us to review this decision, as they claimed that the job of completing the declaration of compliance had been delegated to a junior member of staff and that they genuinely believed it had been completed. We responded by confirming the FPN on the basis that this was not a reasonable excuse for failing to comply with their legal duties. The employer then appealed the decision to the Tribunal. The judge confirmed that we were right to issue the FPN, stating that it was the employer’s legal responsibility to ensure that they comply with the law – including the submission of the declaration of compliance by the deadline. He also confirmed that the fact that a junior member of staff had failed to do this on the employer’s behalf did not amount to a reasonable excuse.
A travel agent with no staff eligible for automatic enrolment failed to complete other duties such as completing their declaration of compliance after wrongly assuming the law did not apply to them.
The employer was a small, independent travel agent who failed to complete their declaration of compliance by the deadline. We issued them with a Compliance Notice; however, the employer failed to comply by the deadline or indeed contact us, so we followed up by sending them an FPN. At this point, the employer’s accountant contacted us and explained that their client has only one employee, who is a non-eligible jobholder, and mistakenly assumed that, as they were a small employer, the new pension regime did not apply to them just yet. They also completely misunderstood the significance of the staging date.
LinkedIn live Q&A on automatic enrolment – 9 August at 10am The Pensions Regulator has arranged a Q&A session on Tuesday 9 August from 10-11am. If you'd like to participate, make sure you join their LinkedIn group before the session starts and post a question.