The Pension Regulator (TPR) receives more than 100 allegations of employers coaxing workers to opt out of pension schemes.
02 August 2018
Influencing staff to opt out of their auto-enrolment (AE) pension scheme, or to stop paying contributions, without them then joining another qualifying scheme, is illegal under section 54 of the Pensions Act 2008, even if the employer is not successful. If found, employers can expect to face a fine or even criminal proceedings.
In response to a freedom of information request, TPR confirmed that it had received 114 allegations of employers coaxing workers to opt out of pension schemes.
Steve Webb, director of policy at Royal London and former pensions minister told People Management People Management that while it was “worrying” that some employees may have been pressured to opt out, 114 was a tiny amount compared to the total number of people who had been auto-enrolled and stayed in a scheme.
“The very low opt-out rates that we are continuing to see suggests that there is unlikely to be a general problem with employers actively encouraging opt-outs,” he added. “But it is important not to be complacent and a clear signal needs to be sent that membership of a workplace pension is a valuable employment right and that employers should not be seeking to put pressure on their staff to give up that right.”
A TPR spokesperson said no evidence existed that inducement to opt out was a “widespread” issue. “The number of whistleblowing reports we have received must be taken in the context that more than 1.3m employers have completed their declaration of compliance – almost all of them in the last three years – as automatic enrolment has expanded,” the spokesperson added.
“Nevertheless, we would encourage any workers who are not being given the pensions they are entitled to or who believe their employers are committing pensions offences to contact us and we will investigate...We will take action against employers who fail to comply with it.”