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‘Loophole’ could delay auto-enrolment for 4 million workers

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The Government is facing calls to clarify an automatic enrolment “loophole” which could see 3,000 employers with 4 million employees delay implementation of the changes by four years.

Consultancy firm Lane Clark and Peacock says any employer with a ‘hybrid’ pension arrangement – a scheme with both defined-benefit and defined-contribution elements – can defer auto-enrolment until 1 October 2017 for members who could have joined the scheme before their staging date but chose not to.

LCP says the drafting of the legislation allows employers who run hybrid schemes but only offer DC benefits to new entrants to delay auto-enrolment.

LCP principal Andy Cheseldine says: “This loophole appears to have remained unnoticed until now because of the sheer complexity of the legislation. We estimate that over 3,000 private sector employers were due to auto-enrol over 4 million workers in 2013 and the majority of these enrolments could be pushed back to 2017 without any compensatory backdating.

“We understand that primary legislation will be required to rectify this situation.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. this is trully outrageous as is the fact that 2 year vesting has been allowed to be maintained. So if this loophole is removed we will still see 50% of the problem with 2 year vesting

  2. Do any of these schemes offer less than 1% employer contribution? Or is this another unhelpful fuss about nothing?

  3. So, who signed off on this legislation? Where does the buck of blame stop for this error? Hyrbid schemes are not uncommon so this could be a real spanner in the works.

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