My son is delighted with his new job, but unfortunately, they do not provide a workplace pension scheme. What are his options in this situation?
Steve Webb explains that it is possible that your son’s employer is not fulfilling their legal obligation to enroll eligible workers into a pension scheme. However, there may be valid reasons for this. Let me explain how the system works and what your son can do if he is missing out.
According to pension rules, employers are required by law to enroll eligible employees into a workplace pension scheme. The specifics of auto-enrollment can be found on the Pensions Regulator’s website, but in simple terms, the key points are as follows:
– The duty to enroll individuals into a pension scheme applies to employees aged between 22 and the state pension age. Individuals aged 18-21 and 66-74 don’t have to be automatically enrolled but can choose to opt into the scheme if they wish to. In that case, the employer must make the necessary arrangements.
– To be eligible for enrollment, an employee needs to earn a minimum of £10,000 per year. Those earning between £6,240 and £10,000 have the legal right to opt into the scheme but are not obligated to do so.
– While employers are not required to enroll employees immediately upon starting a job, they must do so within approximately three months of the individual’s start date.
If your son meets all the criteria for enrollment but has not been enrolled, the first step is for him to communicate with his employer. It is possible that there has been a misunderstanding, or the employer may be unaware of their legal duties. Hopefully, they will rectify the situation, including paying any missing contributions, once aware of their obligations. It is essential to note that your son may also be required to make back-payments for missed contributions.
Unfortunately, non-compliance with auto-enrollment duties is relatively common, particularly among small firms. In the six months leading up to December 2022, the Pensions Regulator issued over 28,000 compliance notices and over 18,000 fixed penalty notices to firms that failed to comply with their duties.
If the employer refuses to comply, it may be necessary to report the situation to the Pensions Regulator, who can take enforcement action. It is possible to report employers who violate auto-enrollment rules anonymously.
I understand that this can be a challenging situation, but I hope your son can resolve it successfully.
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