Investigation by Regulator Brings First Custodial Sentences and Largest Fine

November 2018
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A national recruitment agency was last month ordered to pay over £280,000 for plotting to illegally opt workers out of their auto-enrolment pension scheme.

The prosecution of Derby-based Workchain, and its directors and senior staff, has led to the largest fine and first custodial sentences, albeit suspended, for a case brought by The Pensions Regulator. Encouraged by the directors of the business, five senior staff at the company phoned the workplace pension scheme (NEST), posing as their temporary workers to get the employees’ account ID numbers. They then logged onto NEST’s online system and opted the workers out of their pension scheme. When NEST became suspicious about several of the calls, the Regulator was alerted.*

Todd Rowlands, Head of Corporate at LEBC, stated “This is an extreme case of non-compliance with AE regulations, however it clearly demonstrates that the Pension Regulator has teeth and will bite. In our experience most employer non-compliance is either an oversight or the employer has not sought advice or have been in receipt of poor advice.

At LEBC we believe employers should operate robust pension governance to help protect them against any oversight and maintain regulatory compliance, our governance service protects employers from regulatory failures and supports them in protecting employees’ pension funds and producing positive employee pension engagement.”

Although this is a particularly worrying case, the recruitment firm are sadly not alone in being reported to The Pensions Regulator. The number of complaints received by the pensions watchdog accusing employers of coercing staff to opt out of auto-enrolment rose to 64 between 1st April 2017 and 31st March 2018 – a 68% increase on the previous year!*²

Some Positive News

Millions of workers across the UK have found extra cash to put into a pension, quashing worries that opt-out rates would increase when higher contribution rates began in April. A survey conducted on behalf of The Pensions Regulator found that among those employers that implemented the April 2018 increase in minimum contributions, the mean proportion of members leaving a scheme was only 1.8% for micro, 1.7% for small and 0.9% for medium employers. More than 90% of firms stated that none of their staff asked to leave when contributions were increased from 2% to 5%. There was also positive news from employers with 72% of micro, 75% of small and 71% of medium firms saying they found implementing April 2018’s contribution increases ‘easy’.*³

Ben Doyle
Marketing, LEBC

Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. A pension is a long term investment the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

* Bosses who posed as workers in pensions scam sentenced,, viewed 30/10/18

*² Increasing reports of employers coaxing staff to opt out of pensions,, viewed 30/10/18

*³ Ongoing Duties Survey – Summer 2018,, viewed 30/10/18

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