Seasonal and part-time workers could be exempted from auto-enrolment

January 30, 2017

  •  
  • Emily Burt  

  • 30 Jan 2017

     

     

  • Courtesy of People Management

 

 

Government announces pensions review after pressure from businesses, but experts urge caution

The government has announced it will conduct a review of pensions auto-enrolment, which could see seasonal workers and some part-time employees excluded from the process in future.

The move follows pressure from the National Farmers’ Union (NFU) and the CBI, which called auto-enrolment a ‘burden’ on employers of seasonal and short-term staff. But experts said businesses and the government must not abandon their responsibilities to help individuals save for their retirement.

Employers of short-term workers are able at present to delay auto-enrolment by three months, but the CBI has called for this time period to be reviewed and potentially extended.

“Our main concern is that the auto-enrolment of seasonal workers is an unnecessary burden to farm businesses with little or no benefit to the worker, who is unlikely to ever draw on the resulting very small pension pot,” said Lee Osborne, skills and employment adviser at the NFU. “There should be no pension auto-enrolment requirement for seasonal workers.”

MPs representing rural constituencies that are reliant on workers travelling from overseas to take on seasonal farming work have also expressed concerns that the auto-enrolment process is too time-consuming and complicated to justify. But former pensions minister Steve Webb is among those who have said excluding seasonal workers from automatic enrolment would be a backward step.

“It’s easy to say auto-enrolment is complex, but we need to be mindful that employers do have to implement a workplace pension plan,” said Nathan Long, senior pension analyst at Hargreaves Lansdown, who pointed to both practical and moral imperatives for businesses.

“Even agricultural companies don’t solely employ seasonal workers; therefore you have to run a workplace pension and your system will have to be able to cope with enrolling your staff. There is an extra element of complexity and extra cost in enrolling temporary workers, but ultimately those individuals and workers of the business are still entitled to a pension contribution.”

The Department for Work and Pensions said the review would seek to “build on the success” of auto-enrolment and ensure it continues to work for individual savers and employers across sectors. The review could raise questions about short-term and temporary workers in industries such as catering and retail, who take on extra staff during peak seasons such as Christmas, and gig economy workers.

But Long argued the review must address broader issues. “The key people missing out on auto-enrolment are people who work part-time or have earnings at the lower end of the wage bracket. We know one in four employees of businesses are already missing out on auto-enrolment, and this is largely down to part-time workers not earning enough to justify enrolment,” he said.

“Hopefully, the review will lead to more people across sectors being included in auto-enrolment. Some of these might be seasonal workers who are already being talked about – but also ordinary workers who are in their day job and not earning enough to be put into pensions.

“The notion of excluding a group of individuals and employees because of the slightly different way they are employed is dangerous – having a patchy employment record across lots of different companies doesn’t mean they should not be saving for retirement. Any review of auto-enrolment should be aiming to keep those people in.”

In December, official figures suggested that three-quarters of all eligible employees were enrolled in a workplace pension, thanks to the introduction of auto-enrolment.

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