Laws prohibiting inducements around auto-enrolment came into effect on 1 July.
The Pensions Regulator (TPR) has published a reminder that it will take action where it sees evidence of inducement. This includes an initial fine of up to £400, with escalating penalties of up to £10,000 a day for larger employers.
Charles Counsell, executive director for employer compliance at TPR, said: “Any decision to stop saving for retirement should be an individual’s own. Where we see evidence an employer has taken action with the intention of inducing an employee to opt out, we will consider using our powers against that employer, including financial penalties.”
TPR defines inducement as any action with the sole or main purpose of causing an employee to opt out. There are two categories: incentives or threats.
David James, associate solicitor at Sackers, said: “The test for an inducement looks at what the employer’s main purpose is. If its motivation is to encourage staff to opt out and therefore have less cost, that is an inducement.”
Read more about auto-enrolment and the pension reforms