Employees may get the right to choose workplace pension provider
The proposals, first reported in the Daily Telegraph, would allow savers to pick their own pension provider. At the moment, employees have to stick with the provider chosen by their employer.
Hargreaves Lansdown has been lobbying the government to change this, saying that giving employees a choice would help boost engagement with pensions.
However, there are concerns that such a move would significantly increase the burden on employees, who already have to administer auto-enrolment.
Adrian Boulding, director of policy at NOW: Pensions says: “The employer doesn’t just send money as they do with salaries, they have to supply a lot of additional data so that the pension provider can verify that the correct statutory contributions are being paid.
“This proposal would require the employer to engage in regular verification checks with a multitude of different institutions making an already difficult job virtually impossible. I see this as nothing more than a cycnical attempt to high charging SIPP providers to cherry pick the juiciest members out of a workplace scheme, to the detriment of all the others. Government should resist this siren call.”
As it stands, most employers will offer a choice of funds and some guidance for employees on their options, given their age and risk profile. Those who do not make a choice are automatically put into a default fund, which is designed to be suitable for all.