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Government risking legal action on auto-enrolment

The Tories have raised concerns that a phased approach to auto-enrolment could lead to lawsuits against the Government on the grounds of discrimination.

Speaking at a B&CE fringe event at the Conservative Party conference in Manchester last week, Shadow pensions minister Nigel Waterson said employees who are auto-enrolled last will miss out on up to three years of pension contributions and could try and sue the Government as a result.

At present, the Government is proposing employers are auto-enrolled in order of size, with larger employers phased in first followed by smaller employers over a three-year timescale.

Waterson said: “There are real issues about discrimination and how people are chosen for the first wave while others have to wait until the end. There might be somebody out there who wants to sue the Government for making the wrong judgement.”

Speaking at the same event, Pensions Policy Institute director Niki Cleal warned there is no “perfect answer” to avoiding the discrimination that will arise from taking a phased approach to auto-enrolment.

Some industry commentators have suggested phasing employers in on an industry sector basis in order to avoid competition issues, but Cleal says this would pose practical problems around how different industries are defined.

A DWP spokeswoman says: “In deciding how to implement these reforms we have had to find a balance that will cause the least burden to employers but ensure the highest saving potential for employees.

“We have done a lot of work on understanding the impact such reforms will have on our delivery partners, and concluded that a 36-month staging period strikes the right balance.

“We have not entered into this decision lightly and have taken a considered view on what this will mean for both individuals and employers.”

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