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Bee wants employer auto-enrol contributions to be compulsory

Paradigm Pensions managing partner Steve Bee has called on the Government to consider making employers’ automatic-enrolment contributions compulsory.

Writing in this week’s Money Marketing, Bee says that failure to make employer contributions mandatory threatens to undermine the success of the reforms.

He says: “If we stick with the idea of opting out being an option for employees, why can’t we consider the idea that the only thing employees should be able to opt out of is making their own contributions?

“We assume that because employees may not want to, or be able to afford to, pay into a pension scheme that they also think it is sensible to forego their employer’s contribution too.

“The legislation forbids employers from giving the foregone contribution to employees who opt out in any other form. As far as the employee is concerned, the money is lost if they opt out. They either have it paid as a pension contribution or they do not get it.”

Under the current proposals, employers will eventually have to contribute a minimum of 3 per cent of salary into an emp-loyee’s pension, with employees contributing 4 per cent and 1 per cent coming through tax relief from the Government.

Hargreaves Lansdown pensions analyst Laith Khalaf says: “Requiring employers to contribute even in the face of an emp-loyee opting out of that scheme is asking too much of them.”

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