According to the FT (reporting an exclusive) , the Pension Regulator has spoken on the tricky issue facing employers this winter over staff  “pausing” or opting-out” of auto-enrolment.

Exclusive: Report bosses who push workers to exit #pension plans, says UK regulator https://t.co/5loNoNLhqB

— Josephine Cumbo (@JosephineCumbo) September 4, 2022

Nothing has appeared on the Pension Regulator’s site by way of a statement and this appears to be by way of a private message to the TUC who have been warning of the danger to people’s retirement from those choosing to prioritise cash in the bank over regular saving into a workplace pension.

Report bosses?

Here’s what the FT are saying is in the statement

“While staff can ask to opt out, we are calling on employers to do the right thing and encourage them to seek impartial advice . . . before making any decisions. “Anyone who is concerned their employer is encouraging them to opt out of their pension should contact our whistleblowing service,”

Impartial advice from a financial advisor is not going to be available without a full fact-find, a process that is long and expensive, more expensive than a cash-strapped employee can currently afford.

The other alternative is to speak to Pension Helper, MaPS dedicated service for people needing guidance on pension matters. It does not provide advice but can deliver general information that may be helpful.  Here’s the example given in the article.

The regulator said that even in “difficult times”, it was important for people to keep up their pension contributions “whenever they are able to, as stopping contributions could have a serious impact on their retirement living standards”.

I don’t always agree with John Ralfe but I do on this occasion, the employer may issue statements of the bleeding obvious, but neither it nor MaPs or TPR can come close to helping someone faced with the choice of not paying bills to pay or paying into a pension .

Stopping pension saving, to avoid taking on debt, is absolutely the right thing to do. This is just the pensions industry talking it’s own book. “Pension providers take action to prevent reduced contributions” https://t.co/HTtGvaponh

— John Ralfe (@JohnRalfe1) August 24, 2022

Where the alternative to paying into a pension is being put on a metre, getting cut off, or in extreme cases getting a CCJ , then “heroic saving” becomes “blind folly”.

If bosses can do no more than mouth platitudes then they are being cut-out of any solution to the problem. This straight-bat response from the Regulator is nowhere near nuanced enough to help.

What the Regulator knows.

We live in a digital age. The information needed for monitoring opt-outs and pausing should be available to TPR on a dashboard.

The Regulator gets real-time information from HMRC on what has been contributed by staff to workplace pensions, it can see where members are “pausing” (you can only opt-out around enrolment and re-enrolment) but it cannot see what employers are doing in response.

Up until 2018, the Regulator produced an AE compliance report, this is from the last of those produced

An inducement is described as any action taken by the employer, the sole or main purpose of which is to persuade or cause an individual to opt out of or leave their pension scheme, without becoming an active member of another scheme. We received 90 whistleblowing reports alleging inducement by employers during the reporting period (2.5% of all whistleblower reports received). Of those, 53 resulted in cases being created for further investigation by the AE Compliance and Enforcement team. It is encouraging that such reports remain low in volume.

With such low levels of inducement, TPR may have felt it could get by without public statements , but I worry that TPR simply don’t have the management information to manage this situation without “whistleblowing”. HMRC have committed to producing more information but , with its IT systems outsourced under the Aspire contract, has it had the resource or the will – to build the reporting that TPR need? If anyone in payroll is reading this, they may be able to confirm what is required to be reported by way of employer’s contributions but….

Unless there has been a change since the last time I inquired, TPR will only be able to see the employee‘s contribution, not the employer’s, and anyone who is in, or switches to, a Salary Sacrifice scheme will appear to be making no pension contributions.

Similarly, TPR will not be able to tell the difference between someone becoming a deferred member by stopping contributions (i.e.. ceasing active membership completely) – and someone “actively pausing” (i.e.. becoming an active member of a non-qualifying scheme, where the employer is continuing to make contributions).

What if a benevolent employer makes it known to staff that it is prepared to continue funding its contributions for the period of a “pause”. Is that considered an “inducement” or “doing the right thing?” Is this any different from making a relief payment to staff via their pay-packet? It could be argued that a payment of £1,000 into a pension is both fiscally more efficient and a more ultra-responsible.

And while we are about moral decisions , what is moral about HMRC persisting with its policy of not refunding over-payments of contributions under net-pay (where the member paying cannot claim tax-relief). In its recent press release, HMRC claimed that this was “unjust”, but said it would not be refunding any contributions made in 2022, or 2023. Savers would have to wait till 2025 to get one year’s contributions refunded – those made in 2024.

The Pensions Regulator may be constrained by having limited access to the Pensions Minister right now, it may be in a hiatus as it finds a new CEO and it may feel that it has bigger problems to think about.

But for people trying to find a way through the next six months, help is needed and it cannot be confined to a recommendation that staff take independent advice. There are an estimated 1.2m employers auto-enrolling , can whistleblowing really be relied upon?

What the Regulator can do.

Firstly, if the Regulator has got something to say, it should say it to everyone, not just to the Unions and the FT. I have written to the Chair, CEO and head of policy at TPR and have been told they are considering a general response.

Secondly, if this is the general response, it is no more than a reiteration of what it said throughout the staging of auto-enrolment. The circumstances staff find themselves in is generally considered a “crisis”, we are being told this is a “Dunkirk moment” by senior peers, surely the Regulator can come up with something that fits the time (if only for a temporary period).

I call upon TPR to issue, with the permission of the DWP , a proper statement on what they consider “doing the right thing” which includes help for employers who are not unionised, employees who do not have unions and advisers who are struggling to deliver guidance within an ever tightening advisory budget.

Finally, if this has not already been done, I would ask TPR to complete the work it started four years ago and get HMRC to include the outstanding fields under RTI , that enable it to see what employers are doing for their staff.

I fear that when the staging of auto-enrolment completed , TPR pulled up the drawbridge on reporting. What we get now is a call to whistle blow on behavior that should be reported automatically by HMRC. As for providing help to those having to make hard choices, the employer must be silent. This isn’t good enough.