The draft rules, to be published next month, require contributions to be deducted from pay on the first day of the job instead of at the end of the opt-out window, which looks set to be extended from 14 days to a month.
Industry estimates suggest 30 per cent of the three million people who will be auto-enrolled each year will opt out. Standard says the cost of enrolling and refunding an opt-out would be around £150, bringing the annual industry cost to £135m.
Head of pensions policy John Lawson says: “The issue of refunds is a nightmare. This cost is completely avoidable if the Government started membership and contribution collection at the end of the opt-out period instead of day one of employment. If this goes ahead, it would be a ludicrous waste of money.”
Work and pensions minister Lord Mackenzie says: “The central plank of the reforms is automatic enrolment. This means individuals will be enrolled into a pension scheme before they opt out. The Standard Life proposal would unravel this policy and put at jeopardy the success of the reforms.”