Loophole for employers in Personal Accounts

Employers who want to avoid paying money into pensions can use occupational schemes to avoid their obligations under Personal Accounts, according to Standard Life.

The rules for occupational schemes allow trustees to refund member contributions if they are a member of the scheme for three months or less. Standard says the employer also gets a refund of their contributions if they exercise the loophole. After the member has been in the scheme for 3 months or more but less than two years, the trustees must offer a transfer value, includes the value of the member’s contributions, employers contribution, investment return and effect of charges, and a refund of member’s contributions. If the ex-member takes a refund of contributions, the employer contribution is also refunded to the employer.

John Lawson, head of pensions policy at Standard Life says: “Occupational money purchase pension schemes should have the same immediate vesting rules as personal pensions and stakeholder schemes.”