Pensions Auto-Enrolment: Unintended Consequences of Regulation and Private Law Remedies
Pages | 352-375 |
Date | 01 September 2017 |
Published date | 01 September 2017 |
DOI | 10.3366/elr.2017.0434 |
The introduction of auto-enrolment (AE) into workplace pensions in 2012
This article explores whether further statutory change to the AE regime is required or whether existing private law remedies, with a focus on Scots law, afford sufficient remedies for those suffering loss. If fiduciary, agency, contractual or delictual obligations arise from the AE relationship then this may provide adequate remedies. This article will consider whether fiduciary duties are owed to employees, particularly by the employer (as an agent) to the employee, and the extent of duties owed under the contract of employment.
Employers may owe fiduciary duties to the employee in respect of the method of implementing its employer AE obligations, in a similar way to the duties owed to scheme members by occupational pension scheme trustees.
Fiduciary duties and the circumstances in which they arise can be difficult to identify.
The exercise of power by one party over the other or exercise of discretion or judgement might also define the fiduciary relationship.
Fiduciary duties are often presumed where a particular relationship or status exists
The question of whether the pension product provider or the employer's financial advisors owe any fiduciary obligations to the employee also arises. This could be in the act of providing information to employees or otherwise dealing with pre or post contract issues. For AE, contractual terms are generally agreed between the employer and the provider/advisors and this might lead to an expectation of fiduciary duties owed by the advisor to the employer. Contractual provisions may seek to specifically exclude this and it will depend on the nature of the relationship. If the advisor or provider deals with employees this may also constitute a fiduciary relationship. It is sometimes assumed that all those acting in an advisory capacity are fiduciaries of their clients
The employment relationship can give rise to fiduciary duties
The asymmetry in information and power in the employment relationship demonstrates the employee's vulnerability which might indicate that fiduciary obligations are owed to the employee.
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