Citywire for Financial Professionals
Stay connected:

View the article online at

Workers told to snitch on employers who obstruct their Nest eggs

LibDem minister Steve Webb has urged workers to blow the whistle on employers who put pressure on staff to opt out of a new company pension.

Workers told to snitch on employers who obstruct their Nest eggs

Pensions minister Steve Webb has urged workers to blow the whistle on employers who put pressure on staff to opt out of a company pension.

Under new rules employers who do not offer staff a company pension will be forced to auto-enrol employees into the government’s National Employment Saving Trust (Nest) in a process that starts with larger firms later this year.

Employers and employees will each contribute a proportion of the paid salary to the scheme, 3% and 4% respectively.

However, although employees will be automatically enrolled into Nest, they can opt out of saving through the government plan. This has led to fears that smaller employers, who may view the 3% contribution level as an unnecessary financial burden, will encourage staff to leave the scheme.

Webb said ‘there was an absolute commitment to policing small firms that push people to move out [of Nest]’ and the government would set up a whistleblowing scheme for employees to report companies that strong-arm staff into opting out.

‘There will be a whistleblowing scheme [set up for employees]…unfortunately we cannot be sure [employers] are not abusing [their position],’ he said.

‘We are doing something good [by auto-enrolling employees] but not everyone is going to play by the rules, however, that is not a reason for not doing it.’

Webb added that the Department for Work and Pensions would survey every person who opts out to find out the reasons behind it.

Although Webb would not give  a specific figure on what the government considers a success rate for auto-enrolment, which will affect 10 million people, he said to get ‘five to eight million people saving for the first time would be fantastic’.

8 comments so far. Why not have your say?

Chris Clark

Jan 24, 2012 at 12:46

Quite right too. I've sat in several networking meetings where the undercurrent has been 'we are not happy with the Government about this.'

The way to help fix no pensions, is by having a pension. If a firm tries to avoid doing this, they are stealing from the employees' future.

report this

Graham Barlow

Jan 24, 2012 at 14:13

The whole attitude of Politicians making such inflamatory statements is anti business and anti employment. The very fact to receive an income of £26000 p.a. on benefits is equal to a salary of £35500 p.a pre tax tells you who the profligates in our society are. People would save if they were given proper incentives. The massive shift in income from Pension and other savers to those who are borrowing money is the biggest disincentive for not saving for a Pension than anything else, coupled to that even dividend income on a Pension is Taxed thanks to profligate Brown. Many of the Libs are in the same mold as Brown. Business will only work if it can make a profit, heaping even more costs on to it which will in the end produce very little for the employee,because of the meagre returns on investment. It is the Liberals only answer Blame somebody else. Britain used to have the biggest and best private Pensions in Europe provided by private enterprise. It was ruined by the Politicians either directly or indirectly through their folly.

report this

Simon Taylor

Jan 24, 2012 at 15:29

Quite how the Government think an additional 3% tax on employing people can be sensible is beyond me.

We have seen employers NI creeping up and up and with this on top, we are going to be looking at over 16% surcharge on wages.

The inevitable result will be that some employees will find themselves not only without a pension but also without a job.

report this


Jan 24, 2012 at 18:11

After 20 years service your final salary pension goes up by 5% with 1 year's contribution (as 1 year is 5% of 20 years). If you were to leave your pension it would go up by RPI or CPI a rate of about 5% a year. If you don't get any pay rise or just a very small one and you contribute to your pension you would be better off leaving the pension scheme and letting it go up with inflation and investing the money you would have contributed into a new pension. This is a mathematical fact. If you have nearer 40 years service the problem gets worse if you have a sub-inflation pay rise. So sometimes it is best option to opt out of your pension scheme when you do the maths.

report this


Jan 24, 2012 at 19:09

Another good example of why setting up a new small business in the UK is just not worth the bother. When are politicians going to learn!? I remember one bunch of clowns introducing a Selective Employment Tax ! Result: reduced job creation! People should be told to stand on their own two feet; it needs to start in the schools but I bet teaching unions wouldnt be comfortable with that. They are too busy brainwashing the kids about the benefits of a socialist economy. Well, the capitalists are tending to vote with their feet as I have pointed out recently somewhere else on this site.Who is going to finance the socialist utopia?

report this

Anonymous 1 needed this 'off the record'

Jan 25, 2012 at 09:19

What about employers that are offering employees promotion incentives to forego their existing company pensions schemes future accrurals in favour of offering NEST as the only option?

report this


Jan 29, 2012 at 15:13

Pension schemes for people on basis rate tax are a fraud and governments should stop encouraging it. Why? because when the pensions are drawn they are taxed as income, NOT as a return of your own money. In this way governments get their tax "relief" back. In effect the tax relief is nothing more than a tax deferral and they have the cheek to impose all sorts of regulations and restrictions to their benefit in return for giving nothing. This NEST proposal is an extension of this and should be avoided at all cost.

report this


Jan 29, 2012 at 17:45


Generally when you take your pension you are on a lower income than when you are working and contributing to a pension. This means that you will probably pay less percentage tax on the income from the pension than you would have from the contributions if you had simply taken them as wages. However, you will need a pension of about £12k before you would be better off than just letting the government totally support with income support if you had never made any contributions to any fund in your life. A lot of people will have very slightly above the limit where the government support stops so their entire life spent working and contributing to a pension leaves them only very slightly better off than someone who as never worked or contributed to anything.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts

In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet