But many cross-border issues need resolving before auto-enrolment goes live
The government is introducing a requirement for employers to enrol their workers into a qualifying workplace pension scheme if they are not already in one. Automatic enrolment (‘auto-enrolment’) will apply from October 2012, although it is being introduced in stages.
The DWP published a consultation in February 2012 on Workplace pension reform – automatic enrolment and European employers. This seeks views on proposals to exempt employers of individuals who work both in the UK and in other member states from automatically enrolling individuals who are subject to the social and labour laws of other EEA member states. ICAEW has responded in ICAEW REP 47/12.
ICAEW welcomes DWP’s proposal to exempt dual status workers from having to be auto-enrolled because it will be a truly deregulatory measure. However, we are concerned about the number and range of other unresolved cross-border pension and social security issues.
Implementation of DWP’s proposal would ensure that employers will not have to auto enrol those individuals who have the dual status of both a jobholder and a qualifying person. A jobholder is a worker who is working or ordinarily works in Great Britain under the worker’s contract. A qualifying person is an individual whose place of work under contract is sufficiently located in an EEA state other than the UK that the relationship with the employer is subject to the social and labour law relevant to the field of occupational pension schemes of the other EEA state.
We are however unclear as to why the proposal is confined to the EEA and are concerned that other impacts on cross-border employers and employees – highlighted in early meetings with the former Personal Accounts Delivery Authority and DWP – remain to be clarified. There remain uncertainties for employers as to how to comply and a potential danger of retaliation by other countries.
The guidance published by the Pensions Regulator, while wide-ranging and informative, does not seem to follow the legislation in section 1(1)(a) Pensions Act 2008, the wording of which itself creates difficulties.
We question how it will be possible to enforce the auto-enrolment obligations and contributions liability of foreign-based employers.
It is also unclear how EEA social security issues are being dealt with, and whether consideration has been given to whether or how they apply outside the EEA.
Our concerns are explained in more detail in ICAEW REP 47/12