The government’s decision to ban employers from encouraging their staff to opt out of a workplace pension scheme has been branded self-serving.
Pensions reform minister Mike O’Brien last week proposed an amendment to the Pensions Bill to stop employers from offering inducements – such as higher salaries or one-off bonuses – to persuade workers to cancel their pension contributions.
The ban, due to come into force in 2012, would also prevent firms from forcing employees to sign opt-outs from workplace schemes.
But Deborah Cooper, principal at consultancy Mercer’s retirement resource group, said: “Without amendment, the Department for Work and Pension’s proposal will serve its own interests of minimising its need to pay means-tested Pension Credit, rather than benefiting the target group.”
According to Cooper many of those who will be auto-enrolled into the government’s new personal accounts workplace pension scheme currently have no savings whatsoever.
“The proposed regulatory changes will further reduce their chances to make precautionary short-term saving,” she said.
Announcing the proposal last week, O’Brien said: “It is very important that people are allowed to meet their retirement expectations by building up the savings they need. Decisions on whether or not to save in a workplace pension need to be taken free of any unfair pressure.”