UK pension watchdog The Pensions Regulator (TPR) has fined the administrators of Smart Pension Limited £15,000 ($19,810) for failing to report that they had neither collected nor invested nearly £900,000 in pension contributions on behalf of their members.
TPR said the administrators, who run the Autoenrolment.co.uk master trust, did not inform the regulator in a timely manner that nearly 500 employers had failed to pay contributions that were due. Trustees of defined contribution occupational pensions in the UK have a legal responsibility to make sure contributions are paid, TPR said. Neglecting to report material payment failures is punishable by a civil penalty under Section 10 of the Pensions Act 1995.
“It is vital that workers can be confident that their contributions are being collected and invested properly so that their savings can grow,” Nicola Parish, TPR’s executive director of frontline regulation, said in a release. “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 launched the master trust in 2015 to serve the automatic enrollment market. More than 2,100 members were affected by the notification failures, which occurred between August 2015 and May 2017. Smart Pension eventually alerted TPR to 32 reports of late payments, and at the end of October 2017, informed the regulator of nearly 500 reports of material payment failures, all of which should have been reported earlier, TPR said.
The plan participants were only informed that their contributions had not been collected and invested after TPR informed Smart Pension it was their duty to contact them.
However, TPR said that since it launched its investigation into Smart Pension’s new systems and processes have been implemented by its trustees. It also said Smart Pension worked quickly with the regulator to report the employers so enforcement action could be taken to help protect their members.
“Smart Pension’s systems and processes were ineffective and the trustee’s failure to act on its responsibilities was unacceptable,” said Parish, “but we are encouraged by the commitment of both to improving the way they work.”