The Department for Work and Pensions (DWP) plans to make the changes to the Pensions Bill, introducing minimum employer and staff contributions from 2012 in a bid to encourage more workets to save for their retirement by automatically enrolling them in workplace pension schemes.

Mike O'Brien, minister for pensions reform, said the government wanted to prevent employers from trying to pressure staff or tempt them with 'live for today' inducements into opting out of pension saving.

A DWP spokesman told The Daily Telegraph ‘anecdotal evidence’ indicated employers were using cash inducements to tempt employees out of costly company pensions and officials believed the practice could become more common from 2012 as companies sought to avoid the cost of increased employer contributions.

Any company caught flouting the rules by the new Pensions Regulator could face the cost of putting staff back in the pension scheme, pay arrears and also a fine. The DWP said it would introduce a time limit for complaints against employers and investigations to discourage ‘the possibility of frivolous claims’ by staff.
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