Over the last few years workplaces across the country have had to embrace auto-enrolment – a government initiative to increase the number of people saving for retirement.
While the move has largely been praised by pension experts, many employers are less than enthusiastic about the scheme. After all, employers now have no choice but to contribute towards eligible employees’ pensions. Some employers are so against the scheme that they’re encouraging workers to opt out.
The number of complaints received by the pensions watchdog accusing employers of attempting to get staff to opt out of their workplace pensions increased by 68% in the year 2017-2018.
The data, obtained through a freedom of information (FOI) request, revealed The Pensions Regulator (TPR) received 64 reports between 1 April 2017 and 31 March 2018 alleging employers had urged employees to opt out.
64 reports is a very small figure when you consider how many people are enrolled in workplace pensions, but these figures don’t account for the number of people affected that don’t report their employer’s behaviour.
Considering how complicated pensions often are and how little information is available to workers, the number of employees actually turning to TPR is probably much lower than the number of employees pressured into opting out.
Over the last few weeks I’ve been speaking to people who say their employers have either been encouraging, pressuring or even outright forcing them to opt out of their workplace pension.
Below I’ve included some possible scenarios that some readers may relate to. I’ve written these examples myself (they aren’t direct quotes) but they are based on real situations:
Can my boss offer me a reward if I opt out of my workplace pension?
“My boss says that if I opt out of the workplace pension, he’ll give me an annual bonus. It won’t be as much as his annual pension contributions, but it’ll be nice to get the money now rather than when I retire. I might accept the offer and use it to pay off my credit card debt!”
I can imagine how tempting it must be to accept this kind of deal – especially when you have debts that need to be repaid – but whether you see the boss’ offer as beneficial or not, it’s illegal. In my opinion it’s also incredibly cruel and exploitative.
When employers make offers like this in a bid to encourage workers to opt-out of their pensions, they’re taking advantage of the fact that times are hard and the average worker would rather spend money on holidays, save for a house, or pay off debts than make retirement saving a priority.
But although it may seem like your boss is doing you a favour, they’re not. They’re just looking out for themselves.
Without wanting to sound like the biggest fun sponge in the world, your employer’s behaviour sticks two fingers up at the whole point of auto-enrolment. The main benefit of auto-enrolment is that it gives workers the push they need to prioritise their pension pot – when outside sources are perhaps pressuring them into spending their money on more imminent things.
It may be tempting to accept his offer so you can have the money in your pocket now but it’s likely to be worth so much more if you save it for retirement. Do you want to enjoy yourself in retirement or do you want to live off beans on toast?
- Keep paying into the workplace pension if you can afford to do so
- DON’T accept the boss’ offer
- Consider contacting The Pensions Regulator to warn them of your boss’ behaviour. You can stay anonymous.
Can my boss suggest an alternative to my workplace pension?
“My boss keeps casually suggesting that we opt out of the workplace pension and invest in private pensions instead. She says the workplace pension isn’t very good and we could make more by putting our money elsewhere”
If your workplace pension is shit, it’s because your employer has chosen a shit one. They have made a conscious decision to offer you a pension that will fail to provide you with the money you need when you come to retire.
In your employer’s eyes, it’s within their best interest for you and your colleagues to opt out because it will save them money. Your employer might pretend they’re doing you a favour by suggesting alternatives but in reality, they’re only looking out for themselves. Your boss is not your pal, even if she lets you take the company card to the pub on Fridays.
But the joke’s on your employer because there are plenty of companies that are going above and beyond to offer their workers generous pension schemes. As a growing number of young people realise the importance of saving for retirement, the best candidates will head towards the companies that offer the best rewards. And I’m not talking ping pong tables and free cans of Fanta here. I’m talking meaningful benefits that save us from poverty in old age.
I’d love to tell you to find a new job but I know that might not be realistic. It may even be the case that all other aspects of your job are completely fine. Perhaps you earn a decent salary, you enjoy your role or your boss treats you all to an annual trip to Lisbon. None of this makes your employer’s behaviour in regards to the pension acceptable, but I appreciate you may be reluctant to jump ship when your boss’ unethical approach to pensions is the only issue.
If you want to stay put, do your own research before making any decisions about the pension. Remember that workplace pensions offer you the benefit of tax-relief and employer contributions. Even if your employer is contributing the legal minimum, there’s no guarantee private pensions will beat this.
- Research pension options yourself and don’t opt out unless you really do find a better alternative
- Grow your emergency fund so you can jump ship if things get worse
- Consider contacting The Pensions Regulator to warn them of your boss’ behaviour. You can stay anonymous.
Can my boss force me to opt out of my workplace pension?
“I work for a small business and there are 12 of us in total. Whenever a new person joins the team, the woman in HR calls them in for a chat and tells them to opt out of the workplace pension as soon as they get a letter about it in the post. She says that because the company is small, it’s not in a position to provide workers with pensions. No one questions it because we know the boss will just tell us to get jobs elsewhere. Is this legal?”
Abso-fucking-lutely-not. This is so illegal and insulting, I’m fuming on the behalf of anyone in this situation.
If your employer is not in a position to provide employees with pensions, it is not a sustainable business and it should not be operating. You may turn the other cheek when your boss claims they can’t afford to pay your pensions, but how would you feel if they claimed they couldn’t afford to pay your wages?
Your employed has a legal obligation to contribute towards your pension and their inability to manage a sustainable business isn’t your fault.
I think you should get out of this company as soon as possible. If you’re unable to leave due to financial limitations, start building an emergency fund now. This is not a company you can trust.
- Make an emergency fund a priority
- Start looking for other jobs
- Contact The Pensions Regulator. You can report your employer anonymously.
If you pride yourself on not being a snitch (fairplay to you), you’ll be glad to know this is whistle-blowing NOT snitching. Your employer is doing something incredibly immoral and illegal and you’ll be helping yourself and others by raising the alarm.
