Proper advice essential, says expert, as Pensions Regulator confirms teachers' pension intervention

Nick Stones of Pinsent Masons, the law firm behind Out-Law.com, was commenting as The Pensions Regulator published a report setting out how it had intervened to ensure that over 40 employers enrolled in the Teachers' Pension Scheme (TPS) had fully complied with their legal requirements to submit certain information to the scheme manager (5-page / 59KB PDF).

Capita, which administers the TPS, contacted the regulator in May 2016 after three local authorities and 40 non-local authority employers failed to submit their audited End of Year Certificates (EOYCs) for 2014/15 to the scheme manager, the education secretary, by the legal deadline. Over 8,000 TPS members were affected by the oversight.

EOYCs provide the manager of a public service pension scheme with the necessary assurance that contributions have been correctly credited to the scheme. The certifications form part of the records that the scheme manager is legally obliged to maintain, and ensure that current and future pensioners receive the correct benefits.

In its report, The Pensions Regulator explained that the issue in this case had been insufficient knowledge on the part of the scheme employers about their legal obligations to submit EOYCs and ensure they were correctly completed. The regulator worked with these employers to ensure that they understood what they had to do and had practical guidance on how to do it, which meant that it did not have to take formal regulatory action, according to the report.

Participating employers supported by The Pensions Regulator in this way included academies, free schools, independent schools and further education institutions, as well as three local authorities, the regulator said. All of these employers ultimately submitted the correct information as a result of its intervention, with the exception of one that entered administration, it said.

Pensions expert Nick Stones said that the incident showed the difficulties experienced by some employers when managing their pension obligations.

"Whilst one can have some sympathy with small organisations thrown into a world of self-reliance, the presence of some local authority employers is more concerning," he said.

"The message for small employers is that they need proper advice. Embarrassing as this may be, it is not of a material financial consequence. The risk is that lack of knowledge sees a small employer trigger a material financial liability it cannot afford," he said.

Mike Birch, director of case management at the regulator, said that the case was an example of the effectiveness of its "educate and enable" approach to employer non-compliance.

"As a result of working closely with the scheme and non-compliant employers we have increased their understanding of EOYCs, the necessary certificates have been submitted and we have not had to invoke our legal powers," he said.

"Scheme managers, employers, administrators and members of pension boards have a duty to report breaches of the law they believe of material significance to [The Pensions Regulator]. We urge them to engage with us in a prompt and open manner," he said.