The Government is proposing exempting 9,000 employees working in the UK for firms based in the European Economic Area from being auto-enrolled into pensions.
Auto-enrolment will be rolled out later this year and requires firms to enrol staff into pensions. However, the Government 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”.
A consultation into the proposals, published today by the Department for Work and Pensions says: “To offer a pension to a qualifying person, a UK occupational pension scheme must be able to comply with the social and labour law relevant to the field of occupational pensions of the other EEA state. This can be complex and costly, and our understanding is that very few schemes currently offer cross-border provision.”
UK pensions schemes are also under no obligation to accept people based in the EEA and the Government says it has no plans to give them one. As well as meeting the two sets of national rules, any cross-border scheme also has to be approved by The Pensions Regulator and the regulator in the other EEA country.
DWP estimates 9,000 people would be affected by the change, adding 2,000 of these would probably opt out of auto-enrolment anyway.
The EEA is made up of all 27 EU member states as well as Iceland, Liechtenstein and Norway. The consultation ends on April 2.