Smart Pension Limited, which runs the Autoenrolment.co.uk master trust, failed to tell The Pensions Regulator (TPR) that 498 employers had failed to pay contributions that were due. Smart Pension also didn’t inform the pension scheme members of the issue.
A determination notice published today following a TPR investigation found that Smart had failed to understand what constituted a material payment failure and had been inconsistent in its reporting of them.
It found that the scheme trustee, EC2 Master Ltd, did not ensure the scheme had a proper reporting system in place to comply with statutory requirements.
Failing to report material payment failures is punishable by a civil penalty under Section 10 of the Pensions Act 1995.
TPR has now fined the scheme trustee £15,000 for not reporting the missing contributions and for failing to tell members about the problem.
Smart Pension launched Autoenrolment.co.uk in January 2015 to serve the automatic enrolment market.
In total, around 2,115 members were affected by the failures between August 2015 and May 2017. They were only informed that their contributions had not been collected and invested after TPR informed Smart Pension it was their duty to contact them.
Following the investigation, new systems and processes have now been implemented by the trustees and Smart Pension. TPR says Smart Pension also worked quickly with it to report the employers so enforcement action could be taken where necessary to help protect their members.
TPR executive director of frontline regulationNicola Parish says:“It is vital that workers can be confident that their contributions are being collected and invested properly so that their savings can grow.
“They have a right to know if payments are not being made and we need to know so that we can investigate why it is happening.
“Smart Pension’s systems and processes were ineffective and the trustee’s failure to act on its responsibilities was unacceptable, but we are encouraged by the commitment of both to improving the way they work.
“We are clear that schemes must have efficient and robust processes in place to protect members’ funds. We will take action where this is not the case.”
Smart Pension independent chair of trustees Andy Cheseldine says: “In its case report, the Regulator said we had been “very co-operative in voluntarily providing information and shown progress in quickly fixing the oversights.” In fact, we had fixed these reporting issues within weeks.
“We now have a system in place which includes an automated ‘health check’, an algorithm which runs checks every day on every single employer to make sure they are keeping up with their payments.
“We are very grateful to TPR for its acknowledgement of the improvements we have made and our commitment to keep working closely with them. We take our duties very seriously and what happened was not acceptable. However, we are confident that with this new system in place, this will not happen again.
“It is important to remember that nearly all the employers we reported have now paid their lapsed contributions, and that this finding was for a failure to report payments that had been stopped by employers.”