Smaller employers are being warned not to get “suckered” into using pension schemes which are not up to scratch as they are brought into a landmark savings drive.
Some 1.8 million smaller employers need to place people into workplace pensions as part of automatic enrolment - many just employing one or two people - and concerns have been raised that many will have little previous experience of pension schemes.
Andrew Warwick-Thompson, executive director for regulatory policy at the Pensions Regulator, said there is a risk that some schemes may “fall over in the future”.
“We urge all small employers preparing for automatic enrolment to choose a high quality large scheme such as a well-run master trust or a group personal pension plan,” he said.
“We have published a list of schemes on our website which have obtained master trust assurance and which are open to all employers.”
It was “highly unlikely” he added that members of a scheme would lose their money if it failed, provided their employer follows the guidance given to them about using a suitable scheme.
“The message to employers is: don’t get suckered by schemes that don’t meet the standards.”
He said the Pensions Regulator has been discussing the issues with other regulators and the Government.
In November, the National Audit Office (NAO) said that while the Department for Work and Pensions has successfully introduced automatic enrolment to workplace pensions for large and medium-sized employers, there are ‘’significant risks ahead’’.