Employers could face fines for encouraging staff out of pensions

Employers could be fined if they offer staff higher salaries or bonuses to encourage them not to participate in their occupational pension scheme.

The Department of Work and Pensions (DWP) intends to amend the Pensions Bill as it passes through the House of Lords to make this practice unlawful.

The amendments will mean that employers would have to put the worker back into the scheme, pay any arrears in contributions and could ultimately face penalties if they fail to comply.

Mike O'Brien, minister for pensions reform, said: "It is very important that people are allowed to meet their retirement expectations by building up the savings they need. Decisions on whether or not to save in a workplace pension need to be taken free of any unfair pressure. While it may seem attractive in the short term to accept an inducement to opt out, when people reach retirement with a lower pension, they are likely to regret taking the easy option."