An Opt-out or not an Opt-out, that is the question.
This is probably because in a week like this when the Never-Ending Pensions Tour is in full swing I find I have too much thinking time on my hands as I hurtle from city to city to spread the word on pensions. Right now I'm on a train down to Bristol where I'll be speaking at a conference later on today, probably at about the same time as you'll be reading this I'd guess (at least the driving rain that hindered my homeward journey from the Midlands last night has cleared up and we have another settled late summer day to enjoy.)
I've been thinking, and writing, as you'll know about the fact that almost every employee in the UK who is not in a workplace pension scheme by 2012 will be auto-enrolled into one by new legislation that has just been put on the statute books. Such auto-enrolled employees will have the option of opting-out of schemes, but will not have the right to ask not to be auto-enrolled in the first place. Something like 10 million employees will be auto-enrolled in this way and there is a risk that millions may simply opt-out right away. I won't go into the reasons why that might be the case, but I'm sure most people reading the BeeHive know what they are by now anyway.
After the mass auto-enrolments and the mass optings-out have occurred and the dust has settled a bit financial advisers will find that all the employees they meet after the event will either be members of workplace pension schemes or opt-outs who have left workplace pension schemes and foregone the benefit of a contribution from their employer towards their pension savings as a result. Both groups will thus be off-limits to advisers and financial institutions as far as individual pensions and other long-term savings products are concerned.
But what about people who might be opt-outs and workplace pension scheme members at the same time? People who work for more than one employer could easily find that the duties laid on those employers by these new regulations will lead to them being auto-enrolled into more than one workplace pension scheme come 2012. What if someone like that chooses to stay in one of the schemes into which they find themselves auto-enrolled, but opts-out of the other (or others)? Will they be classed as an 'Opt-out' or will they be classed as a scheme member?
I don't know the answer to this, by the way, it's just one of the tricky questions I found rattling around in my head last night as I huddled up against the rain on some train station that's all. More of them may come to me when I'm on my way home from the South-West tonight for all I know. (That's the trouble with pensions these days I guess; it's all questions, questions, questions...)
16 September 2009
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