Government plans to ban firms from encouraging or forcing staff to opt out of personal accounts could compromise well-intentioned employers concerned over meantesting.
Hamish Wilson actuarial and pensions consultancy partner John Branford says it would be “scandalous” if employers were penalised for alerting staff to the fact they may lose out on means-tested benefits.
Branford says: “We do not take issue with making it unlawful for unscrupulous employers to coerce workers into giving up their entitlement to an employer contribution. But there will be situations where well-meaning employers consider it appropriate to alert workers to the fact they may lose out on means-tested state benefits if they take up the right to accumulate retirement savings through personal accounts.
“It would be scandalous if such employers felt prohibited from doing right by their workers for fear of being penalised by The Pensions Regulator. If the Government insists on being heavy-handed, it would be tantamount to imposing a new tax on employers to subsidise the cost of means-tested benefits.”
The Department for Work and Pensions said this week it is to amend the Pensions Bill to make it unlawful for employers to encourage or force workers to opt out of workplace pension schemes.