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Pensions Bill

I wish to speak to the Question whether Clause 48 should stand part in order to raise questions about how the compliance regime will work in practice. Compliance is to be handled by the Pensions Regulator and Clause 48 amends the duties of the regulator so that it must maximise compliance with the auto-enrolment provisions of the Bill. The regulator has no existing expertise in this form of compliance work and there are concerns among the employer bodies about how it will work in practice. There is a need to reassure the business community that the compliance regime will be targeted at those who seek to avoid the employer duties and that the burden placed on employers who meet the duties is minimal. For example, the CBI believes that businesses should not be required to register with the pensions regulator the fact that they intend to comply with the Act because the Act applies to all employers without limit, so there is no need for the regulator to seek out positively its own population. Currently, the regulator has registers of schemes and not, of course, of employers. It would be a major task to set up a register. Will the regulator require separate registration which, as I have said, bodies such as the CBI think would be very onerous, or will the regulator receive information from HMRC which, through PAYE and NIC systems, knows the details of all employers in the system? Can the Minister say how the regulator expects compliance to work? Will it be risk-based? When will the regulator publish its compliance proposals? We agree with the CBI that simplicity is the key to minimising employer burdens and to focusing compliance work on those most likely not to comply. That was certainly the experience of implementing the minimum wage. Do the Government and the regulator agree with that? The Bill will have a big impact on small and medium-sized enterprises in general and on very small businesses in particular. I have already spoken to the issue of the cost of implementing auto-enrolment for SMEs and micro-businesses. However, that group, which is very large numerically, will pose particular challenges in terms of compliance. Who will be responsible for alerting SMEs to their obligations under the Act and for ensuring that those employers are aware of their compliance duties? Will it be the regulator? The regulator will be something of an alien being to most SMEs. The SMEs are more used to dealing with HMRC through PAYE and NIC compliance. It would seem to us, and it would certainly seem to some of the bodies which have made representations to us, that the Government ought to ensure that the contacts and expertise of HMRC are used to the maximum extent possible when implementing this Bill. By giving the regulator duties, it is not clear that that will happen. Most employers do not want to become noncompliant, but in the early days of the new system mistakes are likely to be made, especially by SMEs that generally struggle with regulatory burdens placed on them. What approach will the regulator take to achieving compliance in that group? Lastly, I need to raise the issue of costs. Clearly, the Pensions Regulator will need to be funded for the start-up costs of the new compliance regime as well as the ongoing costs. How will the Government ensure that those costs are borne not by existing contributors to the regulators coffers but are borne by the whole group of employers? Does that mean that everyone will receive an annual bill from the regulator? How much is that likely to be for different sizes of businesses? What about start-up costs? Will the Government use their powers to pay grant-in-aid for those costs, or will they be recovered from employers over time? The Minister will understand that there is considerable concern among the business community not only about the details of compliance and what the regulator will do, but also about how the financial burdens of compliance will fall in practice. I hope that he can shed light on this issue.