Monday, September 15th, 2008
Pressurising or even encouraging staff to opt out of a workplace pension scheme is to be made unlawful under proposed changes to the Pensions Bill.
Employers will be prohibited from offering inducements such as higher salaries or one-off payments. The Department for Work and Pensions (DWP) plans to introduce the ban by making an amendment to the Pensions Bill during the Lords stages.
A DWP statement says: “The amendment will also cover circumstances where employers simply try to force their workers to opt out. This will leave individuals free to decide if they want to be a member of a workplace pension scheme. The ban would come into effect with the introduction of auto-enrolment from 2012.
“The Pensions Bill 2007 requires automatic enrolment into a qualifying workplace scheme, such as personal accounts, for all workers, between 22 and State Pension age, earning more than £5,035 a year (in 2006/07 earnings terms). Where workers remain in a money purchase scheme, employers would contribute a minimum of three per cent of qualifying earnings, with total contributions of eight per cent made up through member contributions including Government tax relief.
“The Pensions Regulator will be responsible for enforcement of the prohibition on inducements - as well as its new key role of ensuring that employers fulfil their duties under the Bill, including the requirements to automatically enroll staff into a good workplace pension scheme, and provide the employer minimum contribution of 3%.
“It is also proposed that there should be a time limit within which complaints have to be made or investigations launched by the Regulator. This will provide certainty for employers and workers and discourage the possibility of frivolous claims.
“There are differing views among stakeholders on how long that period of time should be. The DWP therefore wishes to consult before setting out the final time limits in regulations.
“Where employers flout the rules against inducements, the Pensions Regulator would have the power to require employers to put the worker back in the position they would have been in had they not been induced out of the scheme, by paying any arrears of contributions due, and could ultimately impose penalties where employers fail to comply.”
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