The U.K.’s pensions watchdog expects to be forced to increasingly exercise its statutory powers against employers that fail to comply with automatic enrollment requirements as small businesses prepare to enter the process.
In his speech to delegates at the National Association of Pension Funds’ annual conference, held in Liverpool, England, Mark Boyle, chairman of The Pensions Regulator, cited figures published in July that showed 99% of the U.K.’s largest employers met their legal duties to automatically enroll employees in a workplace retirement plan.
However, Mr. Boyle warned that the regulator is prepared for that to change as smaller employers begin enrolling their staff next year.
“As the number of employers staging rises significantly, we expect to see corresponding increases in the number of cases we need to use our statutory powers,” which include issuing notices and penalties, he said
Mr. Boyle added that TPR has a “highly experience team of investigators monitoring non-compliance, and we will act accordingly.”
He addressed the “considerable debate over whether (current contribution levels provide) an adequate level of income. There is much further to go, but what the government has done is kick-start a cultural change to reverse the decline in retirement saving. Auto enrollment harnesses the natural inertia that stops many people from saving, by turning it on its head.”
Mr. Boyle also talked about defined benefit plans in his speech, noting the “turbulent” markets and the fact that some sponsors take an “inappropriate level of risk,” while there has been “a reluctance” to take risk from others.
He announced the regulator’s intention to launch a consultation on some changes to its guidance relating to the “continued ability to move from DB to DC” plans, since “there are implications for DB schemes.” He said TPR will consult early next year. “However, the view has always been that in the majority of cases it is better for members to stay in a DB scheme than to transfer out. In any case, members should always, always receive completely independent advice before making a decision.”
