Pensions Bill amendment to ban employers’ inducements to opt out from workplace pension schemes

Encouraging or forcing workers to opt out from a workplace pension scheme will become unlawful under proposed changes to the Pensions Bill.

Pensions reform minister Mike O’Brien said an amendment to the current Bill would stop employers from offering ‘inducements’ – such as higher salaries or one-off bonuses – which encourage workers to stop saving for a workplace pension.

The amendment will also cover situations where employers simply try to force their workers to opt out. The ban would come into effect from 2012.

“It is very important that people are allowed to meet their retirement expectations by building up the savings they need,” O’Brien said. “Decisions on whether or not to save in a workplace pension need to be taken free of any unfair pressure.

“That’s why we want to prevent employers from trying to pressurise staff or tempt them with inducements into opting out of pension saving.”

The Pensions Regulator will be responsible for enforcing the new powers and employers’ duties under the Bill, including the requirements to automatically enrol staff in a good workplace scheme, and provide the minimum contribution of 3%.

Employers that flout the rules could be hit with fines and will be required to repay any arrears.

Under the changes, employers and workers would remain free to negotiate the details of salary packages, but these would need to meet or exceed the minimum standards on pension provision under the new employer duties.

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