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‘Shape-shifting’ employers dodging auto-enrolment duties

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Written by: Emma Lunn
17/07/2019
Employers across the UK that try to dodge their workplace pension duties by changing their identity are being hunted.

The Pensions Regulator (TPR) has become aware of a number of employers that appear to have tried to conceal their failure to comply with the law by hiding behind a new name.

TPR investigators are working with their counterparts at the Insolvency Service and other agencies to take action against offenders that try to use this ploy. Among the offences that may have been committed are fraud, theft and wilfully failing to comply with the automatic enrolment laws.

A number of investigations are now ongoing in cases involving scores of employees who have been denied the pensions they are entitled to.

TPR said the vast majority of employers comply with their workplace pension duties, automatically enrolling eligible employees into a scheme and paying the correct level of pension contributions on their behalf.

However, TPR believes a small minority of employers could be trying to hide their non-compliance with the law by opening new businesses, transferring their workforce across and then dissolving the original businesses. The suspicion is that by changing name, those involved hope to avoid having to pay the pension contributions due.

Investigators are also looking into whether rogue advisers could be suggesting to employers that they use the tactic to avoid their duties.

TPR is currently carrying out short-notice inspections on employers across the UK that are suspected of breaching their automatic enrolment duties.

Darren Ryder, TPR’s director of automatic enrolment, said: “Some bosses might think that changing the name of their company they can avoid their duties but they should know they are on our radar.

“We are aware of the camouflage they are trying to use and will not be fooled by it. We will not tolerate any attempt to deny employees the workplace pensions they are entitled to – and will take action against those who try to dodge their duties.”

Tom Selby, senior analyst at AJ Bell, said: “It is shocking that some employers are using shady tactics in an attempt to pull the wool over the regulator’s eyes and dodge paying pensions to their staff.

“Given the seriousness of these alleged breaches, it would be no surprise to see the regulator pursue the heaviest possible sanctions. Those who wilfully fail to put eligible workers into a pension scheme, as appears to be the case here, could face criminal prosecution and a maximum prison term of two years.”

Anyone who suspects an employer is denying its workers the pensions they are entitled to should email wb@tpr.gov.uk so it can be investigated.

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