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L&G wants compulsion on occupational plans

Legal & General says the Government should reintroduce the right for employers to insist that staff join the occupational pension scheme.

The ability to compel employees in this way was scrapped in April 1988 amid concerns that increasingly mobile employment patterns meant it was no longer beneficial to force individuals to save with an employer.

But L&G believes the re-introduction of compulsion at this level would be a step in the right direction as part of a package of developments to encourage employers and employees to contribute to pension schemes.

Pensions marketing manager Andy Agar says: “Before April 1988, employees were forced to join occupational schemes if there was one. This would seem to be a good idea in today&#39s climate – even with transient work history,it is better that individuals do something towards their pension provision.”

The life office is also proposing that the Government should consider some form of tax-neutral compulsory contributions by employees.

A Department of Work & Pensions spokesman says: “The Government has no secret plans for compulsion. We have neither ruled it out or in although we could return to it in the future.”

Wentworth Rose senior pension consultant Gary Ford says: “The whole thing needs a fundamental review as the shift from final-salary to money-purchase schemes continues.

“Setting up money-purchase schemes is the easier option as there are fewer regulatory hoops to jump through and final-salary schemes mean that employers open themselves up to unlimited liabilities.”


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