The Pensions Regulator is continuing to use its enforcement powers, most recently against employers that choose to “encourage” their staff to opt out of the auto-enrolment pensions system in order to cut costs. In the first three months of this year alone, they issued 35,862 enforcement notices against employers in breach of the rules, relative to 28,446 last quarter.
This increase reflects concerns that a rise in the pension contributions required under auto-enrolment may prompt a spike in opt-out rates. In April, the minimum contribution required from employers doubled from 1% of staff pay to 2%, and this is set to rise again next April, to 3%. For employees, minimum contributions have gone up from 1% to 3%, and will go up to 5% next year.
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