Don’t fall into the earnings certification trap with pension auto enrolment.


With The Pensions Regulator stepping up the number of visits to employers, we decided to hold a workshop to help employers better understand their responsibilities.


Two things became very clear when we met. Firstly, whilst employers appear to have a good basic understanding of the Regulations, they rely heavily on the provider keeping suitable records. If you talk to the Providers they have made it very clear that they take no responsibility for compliance and employers should maintain and check their own records. Secondly, and perhaps more worryingly, when I explained the subject of earnings certification to the group of employers there was a deathly silence.

On further investigation all employers in the group deducted pension contributions based on basic salary. From our experience most of our clients also adopt this approach as prior to the introduction of auto enrolment this was the preferred method. These employers have therefore not certified their earnings by either Set 1, 2 or 3 and are potentially in breach of the regulations. We have sympathy with employers as this is a complex area and a topic that is little understood by IFA’s, payroll companies and providers offer little support. To make matters worse, the latest Case Study published by the Regulator details a case where the employer didn’t certify correctly and was ordered to rectify the position at great expense to the employer.


"Make sure you hold adequate records in case you have a visit from the Regulator and if you haven’t done so already produce an certificate to certify your earnings definition." Tim Gillingham, Managing Director
Tim Gillingham | Managing Director | 26th February 2019

sample-image Tim spends his time either advising on employers' benefit schemes or working with trustees of cccupational pension schemes helping them comply with increasing regulation and deficits. He also helps providers develop their propositions for the new workplace market and distributors take advantage of the opportunities.

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