Auto exemption for EEA staff

23 February 2012 | By Steve Tolley

The Government plans to exempt 9,000 people working in the UK for firms based in the European Economic Area from pension auto-enrolment.

The Department for Work and Pensions says offering a pension to someone who works in the UK but whose relationship with their employer is governed by laws in a different country would be “complex and costly”. It estimates 9,000 people will be affected by the change but 2,000 of these would be likely to opt out of auto-enrolment anyway.

A DWP consultation into the proposals, published this week, says: “To offer a pension to a qualifying person, a UK occupational pension scheme must be able to comply with social and labour law relevant to occupational pensions of the other EEA state. This can be complex and costly and our understanding is very few schemes offer cross-border provision.”

UK pension schemes are under no obligation to accept people based in the EEA and the Government says it has no plans to change this. The EEA is made up of all 27 EU member states as well as Iceland, Liechtenstein and Norway. The consultation ends on April 2.

Worldwide Financial Planning IFA Nick McBreen says: “Just as the Government has dual-tax arrangements with other countries, it is now recognising the need to recognise dual pension arrangements. Cutting red tape for foreign firms operating here is a must as they will just leave the UK otherwise.”

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