In the UK, employers are required by law to automatically enrol most employees in a workplace pension. I've recently been autoenroled in such a scheme. However, I'm conscious of the fact that the space of employee pension providers contains companies who are... not entirely reputable. For instance:
The BBC reports that most of these companies are "too small to survive" and that the regulator fears a "mass failure" of the schemes, after which "the members' money won't be protected".
Perhaps worse still, at least some of these companies seem to have engaged in outright dishonesty. For instance:
- The same article linked above accuses My WorkPlace Pension of "providing misleading information online" - specifically, claiming "to have £50m of pensions under management, handled by the respected city firm Old Mutual" when in reality they "had no such assets at all."
- Smart Pension Ltd has been dinged two times (first, second) by the ASA for apparently sending out "adverts" that presented themselves as government communications, complete with government logos, instructing employers to enrol on Smart Pension's website to avoid penalties.
In theory there's an economic benefit to me not opting out of the scheme - that my employer has to make contributions to it out of their pocket, additional to my salary. If I opt out, I am essentially voluntarily turning down thousands of pounds per year of additional compensation from my employer. But putting everything above together, it seems like there is a real risk that if I don't opt out, my employer and I will together pay a sum of 8% of my salary to a bunch of crooks, all of which will have disappeared by the time I retire and want to withdraw any of it. If that's the case, then obviously I should opt out.
Is this fear reasonable? If so, how should I proceed? What can I do, as an employee, to determine whether the scheme that my company has autoenroled me in can be trusted, and so decide whether to remain enroled or opt out?