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Pensions Ombudsman: Auto-enrolment complaints ‘will overtake liberation scams’

Anthony Arter

Disputes over automatic enrolment will overtake the number of pension liberation scams as small employers try to dodge new rules, the Pensions Ombudsman predicts.

In an interview with Money Marketing – to be published in March – Anthony Arter says he expects complaints arising from savers’ attempts to access their pension before the age of 55 to ease off. But he says requirements for every employer to provide a pension for eligible staff will take the place of scams.

He says: “In the future, my complaints will be around automatic enrolment. That will take the place of liberation. Once you have all the SMEs and people employing a single person and you’ve got 10 million people coming into pensions for the first time, there are going to be issues.

“For example, you could have someone who employs a nanny. They will say ‘I can’t be bothered with all this paperwork and setting up a pension arrangement. How about if I just give you an extra £20 a week?’

“The nanny might plan to work in the UK for only a summer. But actually in a few years’ time they might think they’ve been ripped off and have since decided to stay in the UK.

“They might value a pension as they get older and think they should not have been encouraged not to be enrolled and bring their complaint to the Pensions Ombudsman.”

A multi-force agency has been set up by the Government to tackle liberation scams where savers typically move from a legitimate scheme in order to withdraw cash or make risky investments.

But Arter says there is a difficult balance between protecting people and allowing individuals to take personal responsibility.

He says: “How much do you protect the individual if they have been warned and told of the dangers? Do you refuse to let them do something just because you think it’s rubbish? How far do you go before you allow someone to take their money and throw it in the river?

“It’s a difficult balance to achieve.”



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Presumably the employers involved will be pursued for compensation, this is not a financial services issue as this relates to breaches of employment law.

  2. Correct statement – wrong reason.

    The complaints will come from the great many who have been dragooned into this woebegone scheme against their will and when they will see that the see that the fund value is significantly less than the money paid in I have a feeling that the Ombudsman will be kept pretty busy.

    The view that people will complain if they have had a salary enhancement instead of what would effectively be a salary reduction and then complain about it just shows how unbelievably out of touch these bureaucrats really are.

  3. Absolutely, I am amazed that the ombudsman should feel that this is within his remit. He only covers advice from regulated firms doesn’t he?

  4. Marvellous – they recognise that people will try and circumnavigate the legislation in conjunction with the employee and instead of putting in robust opt out rules and notices decide to ramp up their complaints team and build a bigger empire – conflict of interest methinks. The whole point of a regulator is to protect ALL parties from becoming embroiled in a mistake and to see the goals of legislation are achieved with the best possible outcome.

  5. Thing is AE was a stupid idea to start with.

    How much cost and bureaucracy will be incurred in setting up a scheme for a micro workforce.

  6. David

    Quite so. The reason we have AE is because Governments don’t stand up to their responsibilities. They (as do the rest of the world) recognise that the UK pays the lowest State Pension as a percentage of average salary, in the whole of the OECD. But instead of discharging their responsibility, put the onus on private business – who unlike Government have a day job that takes precedence.

    This enables Government to pretend that tax rates are low. Just add basic rate to NI to AE liabilities and then see what in fact is the true tax rate. If a decent State Pension means raising taxes it is a darn sight easier than having all these quangos and bureaucrats coercing the public and businesses. The net cost to the individual wouldn’t be all that much different when taking personal and company contributions into account. Bear in mind that they (the Government) are already bleating that the eventual full payments fall short of what is required for a decent pension. Only this time this money should be securely ring fenced – perhaps a Sovereign Wealth fund?

    Naturally, I would expect that the providers and fund management industry wouldn’t exactly be chuffed. But look what we would save on NEST costs, that daft Workie Gonk, the MAS, Pension Advisory, the Ombudsman, the regulations, the paperwork, the bureaucracy and so on and so on.

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