The regulator's investigation found Smart Pension - which runs the Autoenrolment.co.uk master trust - failed to report that 498 employers had failed to pay contributions that were due. Smart Pension also didn't inform the pension scheme members of the issue.

Its findings are reported in a determination notice, published today.

The watchdog found that the scheme trustee - EC2 Master Limited - did not ensure the scheme had a proper reporting system in place to comply with statutory requirements.

TPR fined the scheme trustee £15,000 for failure to report to members some late payments as required by section 49(9) and section 88(1) of the Pensions Act 1995. The maximum fine in the band range that the panel considered appropriate in this case was £25,000.

TPR executive director of frontline regulation Nicola Parish, said: "It is vital that workers can be confident that their contributions are being collected and invested properly so that their savings can grow.

"They have a right to know if payments are not being made and we need to know so that we can investigate why it is happening."

She continued: "Smart Pension's systems and processes were ineffective and the trustee's failure to act on its responsibilities was unacceptable, but we are encouraged by the commitment of both to improving the way they work. We are clear that schemes must have efficient and robust processes in place to protect members' funds. We will take action where this is not the case."

Between January 2015, when the scheme was launched, and 31 October 2017, Smart Pension alerted the regulator to 32 reports of late payments.

On 31 October 2017, it made 498 reports of material payment failures to TPR - all of which should have been reported earlier. The total value of outstanding contributions in this report was £888,651.94.

In total, around 2,115 members were affected by the failures between August 2015 and May 2017 and were only informed that their contributions had not been collected and invested after TPR informed Smart Pension it was their duty to contact them.

Following the investigation, Smart Pension's independent chair of trustees Andy Cheseldine said: "We now have a system in place which includes an automated ‘health check', an algorithm which runs checks every day on every single employer to make sure they are keeping up with their payments.

"We are very grateful to TPR for its acknowledgment of the improvements we have made and our commitment to keep working closely with them. We take our duties very seriously and what happened was not acceptable. However, we are confident that with this new system in place, this will not happen again.

"It is important to remember that nearly all the employers we reported have now paid their lapsed contributions, and that this finding was for a failure to report payments that had been stopped by employers."