Box-tick on pen­sions and ex­pect nasty shock in fu­ture, says Webb

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton

UK COM­PA­NIES could be sued for hun­dreds of mil­lions of pounds if they con­tinue to pro­vide the bare min­i­mum in pen­sions for em­ploy­ees, for­mer pen­sions min­is­ter Sir Steve Webb has warned.

Sound­ing an alert on the gov­ern­ment’s auto-en­rol­ment pen­sion scheme be­fore con­tri­bu­tions rise next year, Sir Steve said a lais­sez­faire ap­proach to the change – which makes it com­pul­sory for com­pa­nies to en­rol staff on to a pen­sion scheme – could land boards in deep wa­ter and even in court.

“This is not hole in the cor­ner stuff – if thou­sands of peo­ple get a poor out­come you could be talk­ing se­ri­ous money,” Sir Steve said of po­ten­tial pay­outs, point­ing to the US where em­ploy­ers have coughed up more than $350m in le­gal set­tle­ments since 2009. Sir Steve, who was pen­sions min­is­ter be­tween 2010 and 2015 and is now a di­rec­tor at Royal Lon­don, has said in a pol­icy pa­per writ­ten with law firm Ever­sheds Suther­land that courts may in fu­ture come down on those cur­rently com­ply­ing with the law if their schemes aren’t seen as good value for staff.

“Politi­cians and reg­u­la­tors have a knack of com­ing back years af­ter the event and de­cid­ing that what was deemed ‘good enough’ at the time was not ‘good enough’ in hind­sight,” he warned.

The pa­per claims that many em­ploy­ers as­sume once they have en­rolled staff onto a scheme this is largely “job done” – ig­nor­ing ex­am­ples in other coun­tries where firms have faced le­gal ac­tion for not get­ting staff the best out­come. Auto-en­rol­ment was first an­nounced in 2012. As of Septem­ber 807,000 firms com­plied. The min­i­mum to­tal con­tri­bu­tion will rise to 5pc, and then to 8pc in 2019.

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