Auto-enrolment pension schemes – whistleblowing
Dozens of investigations have been launched into companies that have been accused of flaunting new pension rules; the news comes as small firms have started offering auto-enrolment pensions.
Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it.
This is called ‘automatic enrolment’ or auto-enrolment. However the size of the business dictated when the auto enrolment became effective in the business i.e. smaller companies were given longer before they had to implement that large, blue chip organisations.
Workers can choose to opt-out, but it is illegal for a firm to persuade employees to give up their right to a pension.
The pension regulator has said that it has received 60 whistleblowing reports of firms offering incentives for employees to ditch the new pension; any firm found guilty of doing this could be hit with a big fine and also face a claim for automatic unfair dismissal if they then dismissed the employee for complaining about the lack of enrolment.
Ian Abel suggests that companies offering illegal inducements to employees to not take up their pension rights is relatively small, but that it definitely is happening “It’s inevitable that there are some unscrupulous employers who really do not like the idea of having to contribute to a pension scheme for their workers as this effectively increases their overheads and they will sometimes find other ways to get around it, and one of those if to offer inducements. What worries us the most is the possibility of any employee blowing the whistle on their employer and losing their job over it. Whistleblowers are protected in UK Law, and there are serious consequences for employers that unfairly dismiss staff.”
Even part of the NHS has been accused of offering incentives for staff to drop their rights to a pension. We understand that businesses (particularly smaller ones) may have other financial priorities, but they must auto-enrol individuals onto a pension. If you are in doubt whether you should already have auto enrolment up and running in your business, then please feel free to contact us for further advice.