My son is very happy in his new job but they do not offer a workplace pension. What options does he have?
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Pension rules: Son’s new employer has no scheme so how can he sort this out
Steve Webb replies: It is possible that your son’s employer is in breach of its legal duty to enrol eligible workers into a workplace pension, though there may be valid reasons why he has not so far been enrolled.
Let me run through how the system works and then explain what your son can do if he is indeed missing out.
The basic principle is that, by law, employers have to enrol ‘eligible jobholders’ into a workplace pension.
The precise legal requirements for auto enrolment are on the Pensions Regulator’s website but in simple terms, the key points are:
– The duty is about employees, but not those who are self-employed;
– The duty to enrol people into a pension applies to employees who are aged between 22 and state pension age; those aged 18-21 and 66-74 do not have to be enrolled but can opt in; this means they can tell their employer they would like to be part of a workplace pension (with an employer contribution) and the employer has to make the necessary arrangements;
Did you miss out on a state pension lump sum if you were widowed?
This is Money’s columnist Steve Webb calls on elderly widows who might have missed out on a backpayment when their husbands died to get in contact.
He wants to help people get money that is rightfully theirs, and find out if there is a systematic problem not picked up in the Government’s massive correction exercise for elderly women who were underpaid.
Find out if you could be affected, and how to contact Steve here.
> Did you miss out on state pension if you were widowed in retirement?
– You only have to be enrolled if you earn £10,000 per year or more; if you earn between £6,240 and £10,000 you do not have to be enrolled but you do have the legal right to opt in;
– Broadly speaking, the employer does not have to enrol you the moment you walk through the front door (and I note your reference to your son’s ‘new’ job), but the employer has to do so within roughly three months of you starting working for them.
If your son ticks all of these boxes but has not been enrolled into a pension, the first thing he should do is talk to his employer.
It is possible that there has been a genuine misunderstanding or that the employer is unaware of these legal duties.
Hopefully they will comply with their duties (including paying any missing contributions) once this has been drawn to their attention.
Note that in this case your son would be expected to backpay his own contributions too
Unfortunately, however, there are significant rates of non-compliance with these duties, primarily amongst the smallest firms.
In the six months to December 2022, the Pensions Regulator says it issued over 28,000 ‘compliance notices’ requiring firms to comply with their automatic enrolment duties, as well as over 18,000 ‘fixed penalty notices’ where firms had failed to comply.
If the employer is unwilling to comply, it may be necessary to alert the Pensions Regulator who can then take enforcement action.
I appreciate that this can be difficult but you can report employers who break auto enrolment rules anonymously.
Do let me know how your son gets on.
