Consultancy Aon Hewitt is calling for a change to the Pensions Bill before it comes into force, having identified an unintended consequence of the legislation which will create complexity for employers.
In a statement, Aon Hewitt said that while many employers are planning to extend automatic enrolment to all staff regardless of age or earnings, the different definitions of a “jobholder” under the legislation require employers to recognise different categories of worker as having distinct entitlements.
In practice, this means employers cannot give non-eligible jobholders and entitled workers the one month to opt out following auto-enrolment, rather they would have to be treated as normal leavers.
Similarly, if the employer is planning to hold on to contributions for an extended period after auto-enrolment, this cannot apply for non-eligible jobholders and entitled workers.
Furthermore, such staff cannot be put back in the position they would have been in had they not joined.
Principal consultant Gail Philippart said Aon Hewitt would be “surprised” if this was the intent of the law, but as it is in the legislation it cannot be resolved by merely tweaking regulations.
“We would need to see a change to the legislation itself to provide a more practical and pragmatic solution.
"In the meantime, employers have no choice but to plan with this and other complexities in mind, and work as closely as they can with their service providers to build an effective and robust process to make sure they are complying."