Employees are unlikely to have a strong claim against their employer for the selection of an auto-enrolment scheme that performs badly or fails provided they have acted in good faith, the Government has confirmed.
In a response to a Work and Pensions Select Committee report on auto-enrolment published on Friday, the DWP said that while there is no specific provision in automatic enrolment, or wider pensions legislation to prevent a member bringing legal action against an employer regarding the performance of the pension scheme, “provided an employer can evidence that they have had due regard to their choice of qualifying scheme and have acted in good faith in its selection, it is difficult to envisage that someone would have a strong claim against an employer in regards to this.”
In a wide-ranging response to a number of auto-enrolment issues raised by the DWP select committee, the Government also reaffirmed its commitment to strengthen regulation of master trusts in the next Pensions Bill.
But it said it did not plan to develop or expand the Basic PAYE Tool (BPT) further to include automatic enrolment, because HMRC is developing Application Programme Interfaces to replace the functionality of BPT that will enable external software developers to build integrated products for businesses, agents and payroll bureaux that incorporate the functionality of the BPT.
The Government said it is working to understand how the migration of data from BPT to software applications chosen by employers can be supported, their customer journeys, the costs involved and the design requirements.
The Government agreed to develop and test messaging about the consequences of non-compliance for the next stage of the campaign.
But it rejected a call from the Select Committee to develop a communication campaign to highlight the differences between the Lifetime Isa and auto-enrolment into pensions. The Government says it will undertake an Impact Assessment when it legislates for the new Lifetime Isa in the autumn and will continue to monitor auto-enrolment opt-out and contribution rates.