I was wondering whether you could provide me with some advice regarding a pension issue that has arisen at my workplace.
I started working for my company last year, but due to a delay in it giving me relevant paperwork, I recently discovered to my shock that my employer had not auto-enrolled me in the company pension scheme and as such had not paid any employer contributions.
I had also not made any contributions either, with the associated loss of the 1 per cent pension tax relief.
Dilemma: My employer hasn’t enrolled me in a pension scheme, and I’m worried to report it in case I lose my job
When I challenged my employer on this, pointing out that auto-enrolment was a legal requirement, I was told the company pension scheme was being moved.
I was also told my employer contributions have been accrued and after the new scheme was set up they would be invested.
I’m pretty sure that the above is illegal. I currently have no idea where my contributions are being kept and zero evidence that they exist at all.
Furthermore, I only found out about any of this because I had to challenge my employer on where my contributions were. There had been no communication of any of this information previously.
Given that I’ve already raised this issue, I fear reporting the company to the Pensions Regulator as I’m pretty certain that I’ll cop the blame if the company gets in trouble and as a relatively new employee have very few rights at work.
If retaliation did follow, even if I did prove unfair dismissal at an employment tribunal I would only be awarded losses but would still be out of a job in the current ongoing recession.
Although I was told I would not lose out financially from all of this I feel that given that I have made no personal contributions and have missed out on tax relief that this cannot be true. I look forward to any advice or suggestions you could provide me.
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Steve Webb: Find out how to ask the former Pensions Minister a question about your retirement savings in the box below
Steve Webb replies: When your employer chooses to employ people, they take on various duties such as the duty to pay at least the national minimum wage, the duty to provide paid holidays and the duty to enrol specified workers into a workplace pension.
I do understand that when an employer doesn’t fulfil these obligations it is not always easy to force them to do so, especially for anyone who works for a smaller firm and especially when you are worried about the implications of reporting them.
Just to clarify your employer’s legal duties, provided that you earn £10,000 per year or more, and provided you are aged between 22 and state pension age, they are obliged to enrol you into a workplace pension.
They have to choose a provider and make sure that a total of 8 per cent of your ‘qualifying earnings’ (the slice above £6,240 and up to £50,270) is paid into that pension. Their contribution has to be at least 3 per cent of your qualifying earnings.
For the first three months of your employment they are not obliged to put you in a pension, but you do have the right to opt in during that period, and they should notify you of this right.
Once that three month period is over, the money should start flowing, and they cannot simply sit on it until they’ve got themselves sorted out.
When they collect contributions from a monthly paypacket, they generally have until the 22nd of the following month to pass it on to the pension provider.
If an employer fails to meet these legal duties, you can use the Pensions Regulator’s ‘whistleblower’ service to report them, and you can find details here.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
However, as you say, if the employer were to get a letter from the regulator about pensions there is a chance that they would guess who had complained, even though the regulator would not reveal this. (Though if other people in your workplace are also missing out on contributions, perhaps you could jointly complain to the management?)
If you are not willing to take this risk, another option might be to contact the pension company that your firm is currently using.
If they have an account set up for you but contributions are missing, they can be prodded to contact your employer to query why the contributions that they have received are not as expected.
If there are other employees at your firm who have workplace pensions with the same provider then it might be slightly less suspicious if the provider were to make a routine inquiry relating to the entire workforce rather than just one employee.
Sometimes people make complaints to the Pensions Ombudsman as a way of chasing up missing contributions. The Ombudsman’s role is to look into ‘maladministration’ – essentially people not doing their job properly – which has led to loss.
Enforcing legal duties on your employer is the job of the Pensions Regulator, but if you think the pensions company has been a bit sleepy and if they don’t respond positively when you contact them directly, there’s a chance that the Ombudsman could get involved.
You can find more details here.
You are clearly in a difficult and vulnerable position, especially in the current economic climate. But even where firms put people on furlough during the pandemic they were initially given money to make sure that minimum pension contributions continued.
This is a reminder that even during a pandemic the Government still takes seriously the need for employers to keep contributing into pensions for their workers.
Ask Steve Webb a pension question
Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.
Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at firstname.lastname@example.org.
Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.
If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.
Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful.
TOP SIPPS FOR DIY PENSION INVESTORS
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