Are Company pensions becoming compulsary?

WSforever

Are Company pensions becoming compulsary?

My step-son has been told by his employer that he needs to join the company pension scheme due to changing legislation.

On the face of it, the scheme on offer doesn't seem that great but apparently he is the only employee yet to sign up and pressure seems to be being applied.

Is there changing legislation about to come in that demands he signs up to the scheme?

jem16

WSforever wrote: »

Is there changing legislation about to come in that demands he signs up to the scheme?

Not entirely. There is new legislation coming in that employers must offer a pension scheme. However employees can still opt out.

See https://forums.moneysavingexpert.com/discussion/3898029

or NEST

http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html

BobQ

WSforever wrote: »

On the face of it, the scheme on offer doesn't seem that great but apparently he is the only employee yet to sign up and pressure seems to be being applied.

Is there changing legislation about to come in that demands he signs up to the scheme?

It may not be great but is the employer offering to pay towards the fund and match his contributions and to what level?

Does he already have a personal pension? If not does he have some kind of objection to doing something that provides for his future retirement?

jamesd

It is not becoming compulsory for an employee to join a company pension. It is becoming compulsory for big companies to automatically opt their employees in to membership of a company pension. The employee can choose to opt out and will have to do it again every three years to stay opted out.

If pressure is being applied he should complain to HR about it, whether it is pressure to join, or pressure to opt out (which is clearly illegal).

It's hard to say anything about whether it's a good or bad deal without knowing more about the pension scheme. If it's the one called NEST it's generally pretty bad, more for employers who don't much care about employees and are doing the minimum legally permitted.

If he wants to opt out he should do so as soon as possible. Any contributions deducted from his pay will be returned to him if he does so within one month of being enrolled into the pension but if he waits they will be stuck in the pension scheme. He can't opt out before being enroled, so he should ask that they ensure that he promptly receives an opt-out notice after being enroled automatically. The opt-out notice will normally be sent by the pension scheme administration company; this is so that the eimployer can't apply inappropriate pressure on an employee.

He can join it whenever he likes if he does opt out. He can also choose to pay lower contributions than normal, if he does that he'll be enroled at the full rate every three years and must change it again each time.

I'm assuming that this scheme is using the auto-enrolment rules and isn't part of an employment contract, which has different rules.

withabix

It doesn't really make sense NOT to join a pension scheme.

The employer will be making contributions (free money!) and your son's own ones will be tax free.

It is never too early to start a pension.