United Kingdom

Dunelm Soft Furnishings Ltd forced to make good unpaid contributions by The Pensions Regulator for getting auto-enrolment wrong

January 2014

 

Companies unable to comply with auto-enrolment regulations should seek help and contact The Pensions Regulator as soon as possible, as the regulator continues to investigate companies for potential compliance breaches.

Following the publication of the first automatic enrolment section 89 report which revealed that Dunelm Soft Furnishings failed to comply with its auto enrolment duties - being forced to rectify the £143,000 underpayment of pension contributions - the regulator emphasises the lessons learnt for the benefit of other companies.

In addition to the repeated message for struggling companies to alert The Pensions regulator ‘sooner rather than later’, seeking appropriate specialist advice and ensuring payroll processes and systems are thoroughly tested in advance of staging dates are also recommended.

“Businesses need to be aware that the Regulator is investigating companies at every stage of auto-enrolment,” said Clare Abrahams, Head of Auto Enrolment at Aon Employee Benefits. “Even after Dunelm completed the ‘registration’, the Regulator decided to investigate and fully examine the data which had been provided at registration. They identified that there had indeed been breaches of their auto enrolment duties. The resulting compliance notices had significant financial implications for Dunelm. Other penalties can include daily fines. For employers staging currently, these are likely to be £2,500 per day and for employers with more than 250 employers it can be as much as £10,000 per day.”

In the case of Dunelm, despite the many opportunities for the company to complete its registration or alert the regulator of any problems, it failed to meet its 31st July 2013 deadline.

After investigation, it was discovered that some employees of the firm had been auto-enrolled one month late and others had to wait an extra three months after the point at which they should have been auto-enrolled. In addition, pension contributions for these employees were underpaid.

In response to the investigation, Dunelm, who are now fully compliant with their auto-enrolment duties, said their failure to comply had been partly due to technical problems with their payroll systems.

Abrahams added: “Some businesses are experiencing problems with technology but they often find out too late. We’ve seen a lot of employers now approaching us to go through the secondary market for a second auto enrolment solution since the first did not work.

“It would appear that Dunelm were underprepared and perhaps they did not take the opportunities available to them to get advice and support with what they would need to do. They could have gone about their compliance duties much more efficiently.

We also have clients where provider technology failed and we stepped in to perform manual tasks to keep them compliant until the problems were sorted. Unfortunately, for many of the early stagers the provider technology was just not ready and some is still not suitable.

Employers should be aware that auto-enrolment will cost money to implement and they should not be tempted to just choose the cheapest solution. This is the exact reason so many employers are now going through the secondary market and paying additional costs. However, as well as examining the technology and processes to catch any hiccups at the earliest opportunity, we would have looked at their contribution requirements, scheme alternatives and whether they should consider salary sacrifice in order to reduce their costs."

 

 

Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.