Rise in pension scheme whistleblowers raises concerns for SMEs » SMEInsider

Rise in pension scheme whistleblowers raises concerns for SMEs

The number of whistleblowing reports made to the Pensions Regulator has jumped 33 per cent in a year, according to Clyde & Co, the global law firm.

The sharp increase raises concerns that many SMEs could face enforcement action from the Pensions Regulator if they fail to prepare for auto-enrolment.

Clyde & Co says that the Pensions Regulator has significantly stepped up its enforcement action over the past year.

Data obtained directly from the Pensions Regulator shows that there were 1,497 whistleblowing reports made in 2013/14 compared with 1,985 in 2014/15.

The number of reports to the Pensions Regulator combined with the increase in enforcement action taken over automatic enrolment, suggests there is a growing concern amongst employees that SME employers are failing to comply with the new auto-enrolment regulations.


The new workplace’s pension law dictates that all businesses must enrol all eligible employees into a pension scheme or face enforcement action from the regulator.

The compliance deadline varies depending on the amount of employees, but businesses with the highest number of employees, 120,000 and over, faced the first compliance deadline in October 2012. Businesses with 30 employees or less are yet to face their compliance deadlines, which stretch over the next 16 months.

Clyde & Co warns businesses that fail to comply with the auto-enrolment regulations can face a fine of up to £10,000 per day, depending on the size of the business.

Mark Howard, Head of Pensions at Clyde & Co, comments: “The Regulator’s most frequently used power is to issue a compliance notice – an order to take steps to comply with the legislation. However, that should not be seen as a soft touch as failing to comply can lead to a daily fine which could severely impact the profitability of many SMEs.”

He went on to stress that businesses should be wary of unpaid contribution notices because they could lead to the regulator ordering them to pay the employees’ contributions as well as their own.


While larger businesses have the luxury of HR departments to help them wade through the auto-enrolment process, owners of small businesses will either need to handle the process themselves or outsource it to a suitable provider,” he added.

Clyde & Co does say that businesses can postpone auto-enrolment, but that should not be treated as a genuine solution.

“SMEs should not see postponing auto-enrolment as any kind of solution. It is to allow employers to align pension payments with payroll for new employees and to avoid having to enrol staff that are on short-term contracts into pensions schemes,” Mark Howard continued.

He stressed that the best solution is to ‘plan-ahead’.

“Auto-enrolment is unavoidable, the paperwork and necessary planning can often take far longer than expected.”