The F Families Ltd v The Pensions Regulator

Both parties consented to consideration without a hearing; pursuant to rule 32(1)(b) of the GRC Rules, I am satisfied that I can properly determine the issues without a hearing. Certificates of Compliance were provided as outlined above.

I considered the PDF bundle comprising 114 pages alongside the Certificates of Compliance.

Section 1 of the Act establishes TPR as a body corporate. The objectives of TPR are, broadly speaking, to protect the benefits under occupational and personal pensions schemes, to maximise compliance with duties under the Act and to promote and improve the understanding of the good administration of “work-based pension schemes”. An employer’s duties include the automatic enrolment of employees by employers in a work-placed pension scheme, per section 3 of the 2008 Act. Employers are also required, every three years, to deliver written notification to TPR of how the AE duties have been met.

The Act sets out, in Part 1, Chapter 1, a range of duties that an employer is subject to in relation to AE. Under Section 11, an employer’s duty is that they must give the prescribed information (known as the Declaration of Compliance) to TPR. The information is set out in regulations, the purpose is that he Declaration of Compliance enables the employer to demonstrate how they have met their duty to provide the information which statute requires them to provide to TPR. There is an initial deadline of 5 months from when the AE legislation applies to the employer; re-declaration is required every 3 years.

TPR may issue three types of notice under the Act. The two which are relevant here are a CN which is issued under section 35 of the Act and an FPN which is issued under Section 40 of the Act if an employer fails to comply with a CN; the amount of the FPN is £400. The Pensions Regulator may review an FPN (on request or by its own initiative) and, whilst any review is on-going, enforcement of that Notice is suspended.

The Tribunal’s powers are wide, the Act provides, at section 103:

This Tribunal makes its own decision based on the evidence provided to it. The Tribunal will consider whether there is a reasonable (or good) excuse for failing to comply with the requirements of the CN as such excuse enables the Tribunal to quash the FPN.

I take the grounds of appeal as being 2-fold:

The first ground asks the Tribunal to consider whether the Appellant has a reasonable excuse for failing to comply with the CN (i.e. failing to re-declare). The Tribunal is asked to accept that an Appellant being let down by the person they delegated responsibility to is a good reason for not doing what Parliament has required them to do.

Parliament clearly intended that, on a 3-year cycle, TPR would be told by all employers what the status of their pensions provision is. Parliament also clearly intended that there would be a penalty if an employer did not comply with their duty.

If the Tribunal were to permit an employer to not be subject to a penalty, simply because they delegated the responsibility to someone who failed to comply, then the system as set up by Parliament would be so undermined as to become obsolete. Every employer would be able to delegate responsibility to someone who would then (with no consequence) fail to comply. The first ground must fail.

Turning to the second ground of appeal. I accept that, particular for a small business, a penalty of £400 may be very difficult; Parliament decided to enact a fixed system and the Tribunal has now power to vary the level of the FPN. The second ground must also fail.

For the above reasons, the reference (appeal) must fail.

For the reasons stated, I find that the Appellant has not demonstrated a good excuse for its failure to submit a Declaration of Compliance and its failure to meet the requirements of the CN. Accordingly, I dismiss the reference and remit the matter to TPR. No further direction is required.