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UK — REC concerned about the workability of pension schemes for temporary employees

28 December 2009

The Recruitment and Employment Confederation's (REC) External Relations team has rounded off the year with a concerted campaign on the new pensions provisions which will apply to the temporary workforce from 2012.

It is envisaged that all employers will automatically enrol workers into a pension scheme over a four year period, beginning from October 2012. Contributions from employers will begin at 1% but by 2016/17 employers will be contributing 3%, with a further 4% from the worker and 1% in tax relief. All workers will have a right to opt out of the pensions scheme, which could create a lot of bureaucratic issues in the agency work market where workers are looking to maximise take home pay.

Commenting on the development of the scheme Anne Fairweather, Head of Public Policy at the REC said "it is clear that this scheme was designed for a stable permanent workforce. The fluctuations of the agency work market present real challenges. REC is campaigning for a common start date for all recruitment agencies. The current proposal is for employers to be staged into the scheme by payroll size. This would create significant competitive distortions in the agency work market where the cost of a worker's wages is crucial. It would also be confusing for workers who would be subject to enrolment in some agencies but not others."

REC is also working with the Personal Accounts Delivery Authority to ensure that the state sponsored pensions scheme is viable for the agency market and the Pensions Regulator to ensure that the scheme is properly policed.

Anne Fairweather continues "the last thing anyone wants is a pension scheme which does not fit with the agency market or which is so complex to comply with that the result is widespread avoidance. There is still a long way to go to ensure that we have a positive outcome and campaigning on these issues will be a priority for the REC in 2010."

REC has been meeting with the Department for Work and Pensions on this matter over the last three years. In addition to this, discussions are ongoing with the Conservative Party about how this scheme would develop, if they were to win the General Election next year.


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