Draft guidance on auto-enrolment certification does not clarify nuances around salary sacrifice and opt-out inducements, leaving some employees in a "netherworld", a lawyer said.
The DWP has circulated an informal consultation document among stakeholders, including the Society of Pension Consultants and the National Association of Pension Funds (NPF), on changes to auto-enrolment legislation.
The document, seen by IFAOnline sister title Professional Pensions, contains long-awaited draft guidance on the procedures necessary when certifying a qualifying scheme.
However, industry figures said it failed to address ongoing salary sacrifice issues.
Hogan Lovells of counsel Penny Pilzer (pictured) said: “Under HMRC rules it has to be irrevocable when you sign up for salary sacrifice, whereas under auto-enrolment rules you must be able to revoke under a certain time period.
"You cannot satisfy them both; there will be a rump of employees living in some kind of ‘netherworld’.”
She added the circumstances under which flex will be considered inducement to opt out are still not clear.
NAPF senior policy adviser Richard Wilson agreed the guidance needs “a lot of work” to make it accessible to the average employer.
He said: “People do not understand how it applies where people have salary sacrifice.
"Essentially if you salary sacrifice someone you are taking them out of auto-enrolment, so will there be clarity around how that should be done so people are certain they will not get in trouble?”
Legal & General pensions strategy director Adrian Boulding said: “If you let staff flex down below the statutory minimum contributions then you must not allow them to trade that for anything else, like a faster company car or paying more into a corporate ISA.”
The DWP said it will formally consult on and then lay the secondary legislation required for the auto-enrolment review recommendations after the Pensions Bill becomes law in the summer.
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