Report bosses who push workers to exit pension plans, says UK regulator


Staff ought to blow the whistle on bosses who’re encouraging them to give up retirement plans to save lots of firms cash, the Pension Regulator has mentioned.

The watchdog’s intervention comes after the Trades Union Congress, the UK’s principal motion for organised labour, final week mentioned extra of its members have been leaving their pension schemes to deal with the intensifying value of dwelling disaster.

The regulator mentioned employers that sought to induce employees to choose out of their pension plan risked enforcement motion and fines, and that workers ought to sound the alarm if this was occurring.

It added that firms couldn’t “encourage their employees to scale back their contributions under the statutory minimal or choose out. It could actually solely be the saver’s resolution”.

The intervention comes as companies throughout the UK are additionally going through unprecedented monetary pressure from hovering power payments, and calls for for inflation-matching pay rises.

Official steerage states that an inducement is any motion taken by the employer, the only or principal objective of which is to aim to induce a jobholder to choose out or stop energetic membership of a qualifying scheme.

Greater than 10mn UK workers are enrolled into firm pension plans, and companies have since 2012 been obliged to automatically enrol eligible staff right into a qualifying scheme.

Underneath this mannequin, employers pay no less than 3 per cent of a employee’s pensionable wage into the retirement plan, with the employee contributing no less than 5 per cent.

If an auto-enrolled worker diminished their month-to-month contributions to lower than the minimal 5 per cent, they may proceed saving however their employer wouldn’t be obliged to keep up its contribution,

The regulator mentioned that even in “troublesome instances”, it was essential for folks to maintain up their pension contributions “every time they’re able to, as stopping contributions might have a severe impression on their retirement dwelling requirements”. 

“Whereas employees can ask to choose out, we’re calling on employers to do the proper factor and encourage them to hunt neutral recommendation . . . earlier than making any choices.

“Anybody who is anxious their employer is encouraging them to choose out of their pension ought to contact our whistleblowing service,” it added

The consultancy Barnett Waddingham final month estimated that greater than 1mn employees have been seeking to scale back their pension contributions to assist pay for soaring living costs.

Unions have been on the alert following high-profile inducement circumstances, similar to when an NHS belief was in 2016 referred to the regulator after it supplied newly certified nurses extra pay in the event that they opted out of their NHS pension.

“The regulation is obvious, and any employee who is anxious about this could communicate to their union,” mentioned Jack Jones, pensions coverage officer on the TUC.

Matthew Percival, altering workforce director on the CBI, the enterprise group, mentioned: “To be clear, employer induced opt-outs are unlawful. The regulator is true to focus on the potential sanctions for companies taking such motion.”

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