As a result of a freedom for information request, new data has revealed that significant complaints were received by The Pensions Regulator (TPR) alleging employers had been inducing employees to opt out of pension schemes during the following time periods: 1 April 2013 to 31 March 2014; 1 April 2014 to 31 March 2015; 1 April 2015 to 31 March 2016; 1 April 2016 to 31 March 2017; 1 April 2017 to 31 March 2018.
Ninety nine cases - which primarily relate to employers inducing employees to opt out of pensions - and a further 15 cases which do relate to inducement, were found. Twelve cases were found during the period 1 April 2015 to 31 March 2016; thirty eight cases between 1 April 2016 to 31 March 2017 and sixty four cases between1 April 2017 to 31 March 2018 – an increase of 68%.
As it is an offence for employers to attempt to induce an employee who is eligible to be enrolled into a workplace pension to opt out - regardless of whether that inducement is successful or not - this has resulted in the watchdog being called upon to penalise the wrongdoers.
Senior performance and reward adviser at the CIPD - Charles Cotton - said;
“This can have a detrimental impact on what kind of retirement these individuals will enjoy, as well as undercutting those organisations complying with the regulations. Law-abiding firms will want to see those companies deliberately flouting the law pursued by TPR and punished.”
Steve Webb - Director of Policy at Royal London - said that 114 reports was a small amount compared to the total number of employees who had been auto-enrolled and stayed in a scheme but nevertheless, it was a worry.
He stated:
“The very low opt-out rate that we are continuing to see suggests that there is unlikely to be a general problem with employers actively encouraging opt-outs.”
He then 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 spokesperson from The Pensions Regulator said:
“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. Nevertheless, we would encourage any workers who are not being given the pensions they are entitled to or who believe their employers are committing pension offences to contact us and we will investigate...We will take action against employers who fail to comply with it.”
In the meantime, data released by the Office for National Statistics (ONS) showed that 44% of employees felt their employer’s workplace pension scheme was the safest way to save for retirement – but the research also revealed that many were not aware of auto-enrolment. Ninety one per cent of those eligible for auto-enrolment thought they had not yet been enrolled into a scheme when, in fact, they had been.
