The Pensions Regulator

Code of practice 06
Reporting late payment of contributions to personal pensions

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Reporting late payments: the legal requirement

14. Managers must ⁴ report to the Pensions Regulator and employees within a reasonable period after the due date if:
15. 1. employee contributions and/or employer contributions are not paid on time; and
    2. the managers have reasonable cause to believe that the late payment of contributions is material.
16. The employer must pay employee contributions so that the manager receives them within 19 days from the end of the calendar month in which they were deducted from pay. This is the 'due date' ⁵ and is the legal deadline by which the manager must receive employee contributions.
17. Under the terms of some employees' plans there may be a contribution pay date. This is the payment date when the manager expects to receive the contributions from the employer.
18. The employer must pay employer contributions (those the employer pays for its employees) so that the manager receives them by the due date the employer has agreed with the manager.

Action on non-receipt of contributions

18. Where managers identify a late payment, they should take action to obtain any contributions that are still outstanding. They should do this by raising the matter with the employer as soon as practicable.

How sure managers need to be before reporting

19. Managers must report to the Pensions Regulator when they have 'reasonable cause to believe' that a late payment is likely to be of material significance to the Pensions Regulator in the exercise of its functions. 'Reasonable cause to believe' means more than an unsubstantiated suspicion. Managers should therefore satisfy themselves that a late payment of contributions has occurred and that it is material.

Deciding whether to report

20. Managers should use their judgement to assess whether they need to report to the Pensions Regulator and employees, taking account of the points in 21 to 23 below.

    The following section sets out which late payments are likely to be considered material.

Late payments which managers should report

21. Managers must report material late payments to the Pensions Regulator and employees. Circumstances which are likely to be material and which the managers should report include:
    1. where contributions remain unpaid 90 days after the due date (unless it is a one-off or infrequent administration error, which is discovered after the 90 days, and which is corrected when found or is thereafter corrected as soon as practicable);
    2. where there is a late payment involving possible dishonesty or a misuse of assets or contributions. For example, managers may have concerns that the employer is using the contributions to alleviate cashflow difficulties;
    3. where there is a failure to pay contributions which carries a criminal penalty. For example, where the employer is knowingly concerned in the fraudulent evasion of the obligation to pay employee contributions;
    4. where the managers become aware that the employer does not have adequate procedures or systems in place to ensure the correct and timely payment of contributions due and appears not to be taking adequate steps to remedy the situation;
    5. where there is no early prospect of outstanding contributions being paid, for example because of the financial circumstances of the employer or for any other reason.

    There is no requirement or expectation that managers should actively search for circumstances such as those noted in points ii to v above. However, if managers become aware of any such circumstances they should be reported.

    The above list is illustrative only and is not exhaustive.

4 Section 111A(7A) Pensions Schemes Act 1993 as amended by section 268(2) Pension Act 2004.
5 Regulation 5 of the Personal Pension Schemes (Payments by Employers) Regulations 2000 (Statutory Instrument 2000/2692).

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