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Pensions Bill

Automatic enrolment, as we have said, will establish a presumption to save as the new default. After jobholders have been enrolled, they have a right to remain in qualifying workplace pension saving. Clause 2 is designed to protect this right by prohibiting employers from acting or failing to act in any way that results in the loss of active membership for a jobholder. The compliance regime in Chapter 2 will apply in respect of the employer duty in Clause 2. However, employers will not be in breach of Clause 2 if they make arrangements for the jobholder to become an active member of another qualifying scheme within a prescribed period. The thrust of the noble Baroness’s amendment would allow employers simply to offer membership of another scheme rather than enrol jobholders into one. If a jobholder declined membership of the replacement scheme, the employer would still be considered to have met the duty. That would undermine the core principle that jobholders have a right to participate in workplace pension saving without interference, unless they make the choice that they want to opt out or terminate membership later. Under this amendment, if a scheme closed, the jobholder could be forced to make a decision on whether to continue saving and might suffer detriment simply because they had not had access to the wider information associated with any decision to opt out under Clause 7, which provides a process for opting out. There is nothing to prevent a jobholder who wishes to terminate their membership of a scheme from doing so. However, we want any such choice to be free and informed. The amendment could, although I accept entirely that this is not its purpose, enable unscrupulous employers purposely to terminate a scheme and subsequently require jobholders actively to opt in to a replacement scheme. That would undermine both the principle of automatic enrolment and that of maintaining scheme continuity. The key to automatic enrolment is that it must be done by the employer, with the employee’s choice following that in light of information that must be provided under those enrolment arrangements.