UK - Companies are paying fixed- term workers more rather than let them join their pension schemes, a consultant claims.
Firms are now required by law to give fixed-term workers access to schemes or give them an equivalent payment in lieu.
But Gissings director Alan Smith says most companies prefer to give fixed-term workers the extra payment rather than take on the administrative burden of granting membership to occupational pension schemes.
He explained: “If someone joins you have to set their records up, arrange for contributions, invest those contributions, send out benefit statements. If you are not careful you will end up with lots of people with lots of bits of benefits.
“It makes it cleaner all around if they have an overall package that is of equal value.”
Royal Mail is one of a few employers that has admitted fixed-term workers into both its pensions schemes – the final salary £15.6bn Royal Mail Pension Plan and its defined contribution Royal Mail Retirement Savings Plan.
Group pensions strategy director Dermot Courtier said: “In the past there has been a reasonable likelihood of temporary or fixed-term workers converting their employment to permanent arrangements.
“We want them to be able to transfer on a seamless basis.”
He added: “We allow entry into either scheme because we are a good employer and we believe it is consistent with our approach of encouraging people to feel it is a great place to work.”
While Royal Mail offers fixed-term workers entry into its schemes, it does not extend the same offer to its agency staff who have the option of a stakeholder scheme.
This week's edition of Professional Pensions is out now.
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