1. DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Industry liaison team August 2015 Automatic enrolment Compliance and enforcement The information we provide is for guidance only and should not be taken as a definitive interpretation of the law. Information for business advisers

2. DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. As a society we are living longer, healthier lives. There are currently four people of working age for every pensioner  by 2050 there will be just two. Millions of people are under-saving for their retirement. Only 1 in 3 private sector workers were in a pension scheme in 2012  and the trend has been downwards for the last 40 years. The reforms being introduced now will help millions of individuals to save more (or save for the first time) for their retirement. 7 million people are under-saving Why automatic enrolment is needed

3. DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What’s happened so far … As at the end of July 2015 54,224 employers have completed their declaration of compliance, covering over 20m workers, of which: 9.3m (46%) were already in a qualifying scheme; 5.4m people (27%) were automatically enrolled; 427k (2%) workers had the transitional period applied; and 5.2m (26%) were ‘none of the above’.

4. DM2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Intelligence % of intelligence referrals 1 April 2014 to 31 March 2015 Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015 The intelligence channels that support our compliance work.

5. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Some of our powers used (to 30 June 2015): –36 information notices –13 statutory inspection notices –1,295 compliance notices –71 unpaid contribution notices –332 fixed penalty notices –4 escalating penalty notices We expect to see an increase in how often we need to use our powers with the mass market roll out of automatic enrolment to large numbers of small businesses. Our research shows that the majority of employers who have completed the automatic enrolment process regret not allowing more time. Use of powers 3,303 cases closed by 30 June 2015

6. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Staging profile Q1 - April to June Q2 - July to Sept Q3 - Oct to Dec Q4 - Jan to March

7. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Investigations Outcome of the 2,082 closed cases April 2014 to March 2015 Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015

8. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Lessons learnt Source: The Pensions Regulator Automatic enrolment: commentary and analysis 2015 Automatic enrolment: compliance and enforcement bulletin April-June 2015.

9. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Which workers should be considered?: It is not just employees who come under automatic enrolment (AE). Even someone considered self employed may not be excluded from the AE duties. If a “personal” contract of work or services exists and the individual is not providing the work as part of their own business, then they would be considered a worker. Fixed term, ‘casual’ or non-permanent workers should be assessed under the same criteria as other workers. Zero hours contract workers are a category of worker employers will need to consider as part of their employer duties. Postponement can be used to ease the process (eg for short-term workers): but workers must be issued a postponement notice, within six weeks from the start of postponement, or postponement cannot be used; and the staging date remains unchanged. Compliance issues among employers - i

10. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Opting-in and out: All eligible jobholders must be automatically enrolled before they can exercise their right to opt-out. Employers must take immediate steps to establish the worker’s enrolment date, upon receipt of a valid Opt-in notice, as they may need to start taking deductions from the next pay day. Reassessing eligibility: Employers must assess workers, who have not previously been eligible, at each pay reference period to see if the eligibility criteria is triggered. Those who have already been automatically enrolled once - or have been an active member of a pension scheme - and have then opted out or ceased membership, should be left until re-enrolment. Staff who earn less than £10,000 a year, will still need to be automatically enrolled if they earn over the threshold for their pay reference period - for example, over £192 for weekly or over £833 for monthly paid workers. Compliance issues among employers - ii

11. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What if an employer makes a mistake and fails to carry out their duties? Tell the Regulator about the breach. TPR’s approach is an employer: should take reasonable steps to put the worker back in the position they would have been in if compliance had occurred on time, and should not profit from their mistake That means the employer should: enrol them, backdated to the original date, and ensure backdated employer pension contributions are paid, and ensure backdated employee pension contributions are collected If TPR decides to take formal action against the employer and the worker should have been enrolled more than 3 months ago, TPR has the power to: require the employer to pay both their own and employee contributions, and require interest to be added to outstanding contributions Remedying a breach

12. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Our approach: To educate and enable employers to help them comply. We want employers to contact us if they are experiencing difficulties. If an employer chooses to ignore their duties - this is unacceptable and statutory notices and £400 fixed penalty fines can be issued for non-compliance, including: failing to complete a declaration of compliance. We recommend employers (or their advisors) should: not leave it to the last moment - thousands of employers may be in the queue! plan to have a pension (if they have eligible workers) and suitable software ready 6 months before staging ensure software is fit for purpose (eg can send data to pension provider) cleanse employee data, and test the payroll / AE software, preferably before staging. Summary

13. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Failure to comply by an employer – escalating penalties Number of personsPrescribed (calendar) daily rate (£) 1-450 5-49500 50-2492,500 250-4995,000 500 or more10,000

14. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Prohibited recruitment conduct (s50/s51) Number personsFixed penalty (£) 1-41,000 5-491,500 50-2492,500 250-or more5,000

15. DM 2777032 v8J These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. We are here to help! Request a guest speaker: https://secure.thepensionsregulator.gov.uk/speaker-request.aspx https://secure.thepensionsregulator.gov.uk/speaker-request.aspx Contact us at: www.tpr.gov.uk/contact-us.aspx www.tpr.gov.uk/contact-us.aspx Subscribe to our news by email: https://forms.thepensionsregulator.gov.uk/subscribe.aspx https://forms.thepensionsregulator.gov.uk/subscribe.aspx For a full list of all our research and analysis: www.tpr.gov.uk/doc-library/research-analysis.aspx Thank you The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.