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Employment contracts and pay

Auto-enrolment penalties and TPR enforcement

Reference guide to The Pensions Regulator enforcement powers for auto-enrolment. Covers the enforcement ladder from compliance notices through financial penalties to criminal prosecution, with penalty amounts by employer size.

UK-wide
Guide summary

Reference guide to The Pensions Regulator enforcement powers for auto-enrolment. Covers the enforcement ladder from compliance notices through financial penalties to criminal prosecution, with penalty amounts by employer size. How The Pensions Regulator enforces auto-enrolment The Pensions Regulator (TPR) has a range of enforcement powers to ensure employers comply with their auto-enrolment duties. Enforcement follows an escalating ladder — TPR will usually start with guidance and reminders before moving to formal action.

  • Step 1: Compliance notice: TPR directs the employer to take specific action to comply (s.35 Pensions Act 2008)
  • Step 2: Third-party compliance notice: TPR can direct a third party (e.g. payroll provider) to take action on the employer's behalf (s.36)
  • Step 3: Unpaid contributions notice: TPR directs employer to pay outstanding contributions within a specified period (s.37)
  • Step 4: Fixed penalty notice: £400 one-off fine for failing to comply with a statutory notice (s.40)
  • Step 5: Escalating penalty notice: Daily penalties from £50 (1-4 staff) to £10,000 (500+ staff) until compliance is achieved (s.41)
  • Criminal offence: Prohibited recruitment conduct (s.54) — inducing workers to opt out is a criminal offence carrying unlimited fine
  • Fixed penalty notice: £400
  • Escalating penalty (daily): £50 to £10,000 per day
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How The Pensions Regulator enforces auto-enrolment

The Pensions Regulator (TPR) has a range of enforcement powers to ensure employers comply with their auto-enrolment duties. Enforcement follows an escalating ladder — TPR will usually start with guidance and reminders before moving to formal action.

Most employers who receive a letter from TPR can resolve the issue quickly by completing the action required. Penalties are reserved for employers who ignore statutory notices or deliberately avoid their duties.

The enforcement ladder explained

Compliance notice: TPR issues a formal direction to take specific action (for example, set up a pension scheme or enrol workers). You must comply within the timescale stated in the notice. Failure to comply moves you to the next step.

Fixed penalty notice: If you do not comply with a compliance notice, TPR can issue a one-off £400 fixed penalty. This is also issued for failing to complete your declaration of compliance on time.

Escalating penalty notice: If you still do not comply, TPR issues daily penalties that continue until you take the required action. The daily rate depends on your workforce size.

Penalty rates by employer size

Escalating daily penalties are set according to the number of workers in your PAYE scheme:

  • 1 to 4 workers: £50 per day
  • 5 to 49 workers: £500 per day
  • 50 to 249 workers: £2,500 per day
  • 250 to 499 workers: £5,000 per day
  • 500 or more workers: £10,000 per day

These penalties accrue each day until you comply. For a small business with 20 workers, 30 days of non-compliance would result in a £15,000 penalty (£500 x 30 days).

Unpaid contributions

If you deduct pension contributions from workers' pay but do not pass them to the pension scheme, TPR can issue an unpaid contributions notice. This requires you to pay the outstanding amounts within a specified period.

Failure to pay contributions that have been deducted from workers is treated very seriously and can lead to criminal investigation.

Criminal offences

Prohibited recruitment conduct (section 54): It is a criminal offence to make a job offer conditional on the worker opting out of the pension scheme, or to take action (or threaten action) against a worker because they are in the pension scheme. This carries an unlimited fine on conviction.

Providing false information: Giving TPR false or misleading information in your declaration of compliance or in response to a statutory notice is also a criminal offence.

How to respond to a notice

If you receive a compliance notice or penalty notice from TPR:

  • Read the notice carefully and note the deadline for action
  • Take the action specified (set up scheme, enrol workers, pay contributions, or complete declaration)
  • Contact TPR if you need more time or do not understand what is required
  • Keep evidence that you have complied
  • If you believe the notice is wrong, you can submit a review request within 28 days

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