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Standard fears £135m opt-out bill

The pension industry could be hit with a £135m admin bill if the auto-enrolment regulations go ahead, says Standard Life.

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.”

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