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Regulation

TPR to Seize Assets of Employers Ignoring Pension Fines

High Court enforcement officers will be used to force delinquent companies to pay up.

By Michael Katz

UK employers may want to think twice before stiffing The Pension Regulator (TPR) of any workplace pension fines they receive. 

TPR said it will send High Court enforcement officers (HCEOs) to enforce court orders, and seize assets owned by employers who refuse to pay workplace pension fines. If an employer does not pay its debt, HCEOs, who have the authority to force entry to locked commercial premises, could visit an offending business and remove items to sell to cover the amount owed—including the employer’s vehicles. 

“Those who break the law by denying their staff the pensions they are entitled to should expect to be punished—and must pay any fines they are given,” Darren Ryder, TPR’s director of automatic enrollment, said in a release.  “The use of HCEOs is a last resort for us. Unfortunately the behavior of a tiny minority means it may be necessary.”

TPR has never used HCEOs before, and said it will only use them in rare occasions when a debtor has failed or refused to pay a fine or levy imposed by TPR without a good excuse, and after which TPR has subsequently obtained a court order for the amount owed.

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The regulator said it will also use HCEOs to collect payment for other fines or levies issued by TPR that trustees or trust managers fail to pay, such as for chair statement and pension plan return offenses.

According to TPR, 32,211 employers were issued with fixed penalty notices for non-compliance in the fourth quarter of 2017, and 6,770 were issued with escalating penalty notices. This is among more than 1.1 million employers that have completed their declaration of compliance to confirm that they have met all of their automatic enrollment requirements.  

“AE has been a huge success thanks to the vast majority of employers who do exactly what they should,” said Ryder, “but a tiny minority not only ignore their automatic enrolment duties but fail to pay their fines, even after the courts have ordered them to.”

TPR also said it will consider whether it should prosecute employers who remain non-compliant with their automatic enrollment duties despite being given a court order demanding they pay the fines they have incurred.

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Home > News > Research > Tax Collected from Lifetime Pension Allowance Soars 1000%
Research

Tax Collected from Lifetime Pension Allowance Soars 1000%

Government windfall rises to £110 million from £10 million in 10 years.

By Michael Katz

Since the UK’s lifetime allowance of pension benefits was introduced in 2006, the amount of taxes collected from individual pensions exceeding the limit has risen 1000% in 10 years to £110 million from £10 million, according to income specialist Retirement Advantage.

The lifetime allowance is a limit on the amount of pension benefits that can be drawn from pension plans, and can be paid, without triggering an extra tax charge, whether it’s in the form of a lump sum or retirement income. As the current limit for the lifetime allowance is £1.03 million, any pension savings over that amount will be subject to the lifetime allowance tax.

The tax rate paid on pension savings above the allowance is 55% if the payment is taken as a lump sum, and 25% if it’s received through pension payments or cash withdrawals.

“The numbers paint a stark picture of how the lifetime allowance has impacted savers,” Andrew Tully, pensions technical director at Retirement Advantage, said in a release. “There is an obvious link to make between the increase in tax take and the slashing of the lifetime allowance over the last six tax years,” he said, adding that “this is just the start, and the government’s tax take from the lifetime allowance will continue to grow substantially in [the] future.”

The data, which Retirement Advantage received via a Freedom of Information request, also shows a sharp rise in the number of people applying for protection, to 61,000 people from 8,000 people between 2006 and the 2016/2017 tax year.

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The majority of the increase has taken place since 2012 when the government started cutting the lifetime allowance, which fell to £1 million from a peak of £1.8 million, but has since edged up to its current £1.03 million.

“The lifetime allowance is an arbitrary tax which penalizes individuals who have enjoyed good returns on their investments,” said Tully. “There is also a significant disparity in the way benefits are measured against the lifetime allowance depending on whether the individual is a member of a defined benefit or defined contribution scheme … there is an argument the lifetime allowance should be scrapped.”  

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