REC still not happy with staggered pension proposals

The Recruitment and Employment Confederation (REC) has once again called on the Government to re-consider it's 'staggered' proposal for the automatic enrolment of agency workers into qualifying pensions schemes from 2012.

In an attempt to to encourage more workers to save for the future, the scheme, which is being brought in under the 2008 Pensions Act, has been broadly welcomed by unions, the private sectors and by political parties.

Under the current proposals, which are set to be introduced from October 2012, agency workers, including freelancers and contractors, will be automatically enrolled onto a pension scheme if the agency's payroll is above a certain size - with a staged implementation scheduled for the following four years.

According to the REC, this will create difficulties within the temporary staffing sector, and particularly for those agencies that are close to the payroll threshold. Anne Fairweather, head of public policy at the REC said that they were campaigning for the same start date for all recruitment agencies.

Currently employers will be staged into the scheme based on the size of their payroll. This would lead to significant competitive distortions in the agency job market where the cost of a worker's wage is crucial. It could also cause confusion for workers who would be subject to enrolment in some agencies but not in others.

Ms Fairweather added that "the last thing anyone wants" is a pension scheme which does not fit with the agency market, or one that is so complex to comply with that the result is widespread avoidance. She went on to point out that there is still a long way to go and the REC will continue campaigning for a positive outcome in 2010.

Regardless of how the new rules are actually implemented, it is believed that many agency workers will choose to opt out of automatic pension enrolment. Commenting on this possible outcome, Tom Hadley, the REC's Director of External Relations said that they anticipate that many agency workers will opt out of a scheme once enrolled. Temporary workers want to maximise their net pay and so any system must be able to cope with people who want to opt out.