An employers’ group has called for a pause on the government’s plans for workplace pension pots to follow people when they switch jobs because of the administrative burden.
Judith Hogarth, interim head of employment and pensions at the Engineering Employers’ Federation, said it would cause an “administrative headache” for employers.
She was addressing the work and pensions select committee on the progress of auto-enrolment which came into effect in October 2012.
Ms Hogarth said: “There is probably a reason for pausing on the idea of the pot following the member.
“It is going to be a big administrative headache for many schemes and many employers so we think there is a business case for pausing and thinking ‘do we still need it and let’s look at the evidence base for that’.”
She also said many employers were reliant on IFAs to give them advice.
Mike Cherry, national policy chairman of the Federation of Small Businesses, said auto-enrolment had caused additional burdens for his membership and had not yet caught on with the self-employed.
He said: “We have to raise confidence in pensions. The industry is not as transparent on what it offers and there is obfuscation. It is putting the self-employed off using pension schemes for their retirement.”
Independent pensions consultant Ros Altmann said: “I am concerned that it seems to be older workers who are opting out. They should be staying in because otherwise they are turning down the free money.
“Just giving people financial guidance at retirement isn’t enough. We need to embed financial education into auto-enrolment.”
The department for work and pensions declined to comment.
Adviser view
Darren Amos, an adviser with Buckinghamshire-based Anstee & Co, said; “I think auto-enrolment has added an extra layer of burden on employers, but that’s probably because they are not seeking the level of advice they could be.
“The burden shouldn’t be any more in real terms if they are already running a pension scheme. The ones really feeling it will be the companies who weren’t running one.
“Pots following members probably doesn’t affect the employers much unless they don’t engage an adviser.”