Insolvency practitioners will have a role to play with auto-enrolment responsibilities for insolvent companies. Nicola Edwards, head of compliance and enforcement at The Pensions Regulator, runs through what IPs need to know
Head of compliance and enforcement
‘Insolvent employers must still comply with their automatic enrolment duties’ is the message to insolvency practitioners (IPs) from The Pensions Regulator.
Where an insolvent employer continues to employ staff they continue to have auto-enrolment obligations and insolvency practitioners acting on behalf of their employer clients have a responsibility to ensure the employer’s compliance.
Next summer, tens of thousands of small businesses will see their auto-enrolment duties come into effect. Unlike larger insolvent employers, small employers are likely to use small high street practices with fewer resources. The Pensions Regulator is now alerting them to what they need to know.
Auto-enrolment laws apply to all employers, who must enrol certain staff into a workplace pension scheme and make contributions towards it. Eligible workers are those over 22, who earn more than the current £10,000 threshold and who work or ordinarily work in the UK. Employers must assess all their staff and tell them how the changes apply to them as individuals.
Employers, if they have not already done so, must first find out their staging date. The staging date is a date set in law and is when an employer’s auto-enrolment duties come into effect for that employer. The easiest way to do this is by using the staging date tool on the regulator’s website. In order to comply with auto-enrolment duties, the employer will need to carry out a number of tasks.
Employers should then use the timeline planner which tells them what they need to do and when. They will also be asked to nominate a contact who will be responsible for the day to day implementation of auto-enrolment and who will receive important information from the regulator. Where a business is insolvent and an IP is appointed, the IP should be the primary contact.
Postponement is a tool available to employers who want to postpone the duty to assess their staff, it is often used by employers who have staff they know are in short term employment. In the same way, postponement can be used for insolvent employers who will no longer be employing staff.
Declaration of compliance
The final task for an employer is to complete a declaration of compliance. This is a legal requirement and informs the regulator what the employer has done to meet their duties. In the case of an insolvent employer, there will be no requirement to complete a declaration of compliance where, on the staging date, the employer no longer employs any staff. Where, on the staging date, the employer still employs staff but they subsequently leave employment, the employer will still need to complete the declaration of compliance.
Under auto-enrolment law, employers must keep certain records for six years. In the case, of an insolvent employer, once there are no workers left then the entity ceases to be an employer and so the requirement ceases to apply. Any record keeping requirement under insolvency legislation would however continue to apply.
The role of The Pensions Regulator
Under the Pensions Act 2008, the regulator’s objective is to maximise employer compliance with their auto-enrolment duties. In line with its compliance and enforcement strategy, the regulator takes an ‘educate and enable’ approach, providing employers – and in the case of insolvent employers, their IPs – with the information and guidance to help them comply with the law. The regulator has also recently refreshed its website to be more user friendly for smaller employers.
Around 12 months ahead of their staging date, businesses will receive a letter from the regulator warning them to take action and get a plan in place. If IPs wish to contact the regulator they will need the letter code and PAYE reference from these letters.
Compliance and enforcement
The regulator’s consistent message to employers is to start preparations in good time to avoid non-compliance and IPs should also leave, as far as possible, enough time starting with visiting the regulator’s website for more information. We take an ‘educate and enable’ approach and in line with our compliance and enforcement strategy and will consider matters on a case by case basis. Intentional non compliance will be met with penalties.
We appreciate IPs will have a lot to do once they are appointed to an insolvent employer and they are also urged to take action to rectify any problems sooner rather than later. IPs will find all the information they need on our website and that should be the first port of call. There are a small number of instances, however, when an IP should contact our customer support team. IPs should contact us if an employer ceases to exist (they no longer employ staff) so that we can update our records.
The customer support team will also be able to assist if an IP does not have the information they need to complete a declaration of compliance – such as the letter code (found on letters from the regulator to an employer).
Posted on 17th December 2014 by
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