Wed, 18 Jan 2012

Payroll professionals warned not to give pensions advice

Payroll managers should not give pensions advice to employees that could influence their decision to opt-out of an auto-enrolment scheme, experts warn.

Pension auto-enrolment will start for the largest companies from September 2012 with all firms having to auto-enrol eligible staff into a compliant scheme by 2014.

As part of the process workers can choose to opt-out of a company’s chosen pension scheme but this process must not be influenced by the employer or fines may be incurred.

Amy Paxton, senior employment consultant at Croner, said: “Any employee’s decision to opt out of a scheme, or stop saving for retirement, should be taken freely and without influence by the employer.

“Employers must not take, or fail to take, any action, with the sole or main purpose to attempt to induce an employee to opt out of a pension scheme.”

Additionally Paxton says job applicants must not be screened out on grounds relating to potential pension scheme membership and it should not be suggested that a job applicant’s success could depend on whether or not they opt out of a pension scheme.

“Fixed penalties will be given depending on the size of the organisation from £1,000 to those with one to four employees to £5,000 for those with 250+.

“Our advice to payroll managers would be to avoid giving any comments or advice to employees unless they are trained to do so,” she warned.

See also:

• Auto-enrolment: NEST releases pension jargon-buster
• Auto-enrolment regulator says non-compliance will result in fines but does not disclose details
• PwC: Companies in danger of leaving auto-enrolment preparations too late