The Government is planning to bypass EU laws by auto-enrolling employees into group personal pension schemes through the back door but commentators claim the move could result in a meltdown.
In an evidence session on personal accounts held by the work and pensions select committee recently, pensions minister Mike O’Brien said he is not asking the EU for permission to allow auto-enrolment for good GPP schemes in case it refuses.
He said: “What we are not trying to do is get the EU to intervene here. We are not going to them and saying, we are going to do this and now are you going to intervene, because the chances are that they might say yes and we do not want them to say yes.”
Under current proposals, employers who run GPPs deemed to be as good as personal accounts will be exempt from personal accounts and all their staff will be auto-enrolled into the employer’s GPP.
But EU law prohibits auto-enrolment into contract-based schemes, such as GPPs.
Scottish Life head of pension strategy Steve Bee says: “The Government is saying, we are hoping for the best but we do not want to mention it to the EU in case we are not allowed to do it. It is a cock-eyed way of doing things and does not fill me with confidence.
“Clearly, there is no guarantee that our existing GPP schemes are not heading for a meltdown in 2012.”