The regulator used its formal powers, including compliance notices and fixed penalty fines, 8,812 times in the year to March 2016 – up from correct 2,169 the previous year. However, it had itself anticipated this increase “in line with the rise in small employers staging and the behaviours we expected from this group”, according to its annual review of the automatic enrolment programme (45-leaf / 2.2MB PDF).

Pensions expert Tom Barton of Pinsent Masons, the law firm behind Out-Law.com, said that the statistics were currently “skewed significantly” by the roll-out of the programme, which began for the largest employers in 2012, to small and ‘micro’ employers.

“Once that process is complete it will be easier to assess how the policy is really working – which is good timing for the 2017 review,” he said.

“Given that smaller employers possess limited resources to support technical compliance requirements, it is unsurprising that regulatory action is now on the rise. For the small minority that are not playing ball, there will inevitably be consequences. Even then, the Pensions Regulator is clearly trying to toil with those employers without actually imposing any financial penalty. Employers that are fined following simply ignoring compliance notices really only possess themselves to blame,” he said.

Barton said that this year’s report by the regulator actually demonstrated the continuing success of automatic enrolment and the policy objectives behind it. Two thirds of entire employees are now active members of a pension scheme, compared to 47% in 2012; while compliance with the rules among the first group of eligible small and micro employers are above 95%, according to the Pensions Regulator.

“This demonstrates that most small and micro employers are getting the message and getting on with it,” Barton said.

Enforcement powers available to the Pensions Regulator to ensure employer compliance with their duties include the ability to lug out inspections; and to issue statutory notices, fixed penalties and escalating fines. These can reach up to £10,000 per day for the most serious breaches by the largest employers. The regulator issued 6,241 compliance notices over the review year; along with 2,002 fixed and 122 escalating penalty notices, according to its report.

“Most … small employers comply on period and we persist to see lofty compliance rates,” the regulator said in its report. “However, others require a nudge and are prompted to meet their duties when they receive single of our notices.”

Once the reforms possess fully rolled out, entire employers whatever their size will possess a legal duty to automatically enrol their workers into a pension scheme which meets certain minimum requirements, and will be legally obliged to build contributions towards the pensions of those that do not opt out. They will also be required to ‘re-enrol’ those who opt out once every three years.

‘Staging dates’ by which smaller companies will possess to initiate the process run until 2018. Of those left to stage, 57% are classed as ‘micro’ employers with four employees or fewer, and 34% of those micro employers possess correct single employee. The regulator has revised downwards the total number of employers that will ultimately be expected to comply with the rules to exclude a big number of ‘single person directors’ with no employees, identified via employer feedback and access to the ‘real-period information’ system operated by HM Revenue and Customs (HMRC).

Barton said that it would be important for the regulator to establish the causes of any compliance issues which were not related to employers “simply burying their heads in the sand” atthesametime the final stages of automatic enrolment, and as piece of the government review of the policy which will be carried out next year.

“To acquire from instances of failure we require to comprehend the underlying reasons for it,” he said.

“Is there an advice vacuum? Are they underestimating the period taken to select a scheme and complete the ‘onboarding’ process? Are they being let down by advisers and suppliers? Fines and penalties are a useful deterrent – but only be addressing these issues can we really expect to improve the compliance rates for small and micro employers,” he said.