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‘Employers face huge costs over auto enrolment’

David Blunkett’s plans for automatic enrolment in company pensions will increase employers’ costs, says Clerical Medical manager of industry affairs Stuart Mason.

Mason says the Work and Pension Secretary is right to suggest that plans for auto enrolment, or soft compulsion, will not be prevented by the European distance marketing directive after the Treasury issued a financial promotions order on July 11.

The order means that employers can take on the role of IFAs in this instance and promote their pension schemes in the workplace.

But Mason says employers will still face huge costs as they will have to gain the approval of existing employees, either by issuing new contracts or having current contracts amended to include new pension arrangements.

The Department for Work and Pensions says it will issue guidelines to encourage employers to get employees to opt out rather than opt in to pension schemes and Blunkett has hinted that auto enrolment will be high on the agenda after the publication of the Turner report this autumn.

Mason says: “The situation is not as clear as we would have hoped. Employers will still have to get the approval of existing employees by issu- ing new contracts or amending current ones, which could add up to a significant cost to them.”

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