Consultation on key employer issues made to wait

Key issues for employers such as scheme certification, qualifying scheme criteria and compliance are not to be addressed until later in the year, despite the DWP issuing two consultations, covering the automatic enrolment process and employer duties from 2012, last month.

Axa says employers will now have to wait for later consultations before they can address issues such as scheme certification, qualifying scheme criteria and the compliance regime, which it says are the areas over which employers have considerable concerns.

The consultation on scheme disclosure requirements includes a review of existing arrangements and has put forward several areas as having scope for some deregulation. These include the basic information about the scheme, which currently consists of about 30 individual prescribed requirements, which could be reduced in number to focus on key issues for new members such as contributions, benefits and normal pension age. The DWP proposes that beyond these requirements it would be for trustees to decide on any additional information to be provided to the member.

It also calls for simplification of the annual report, annual information and statutory money purchase illustrations.

The consultation on the automatic enrolment process is seeking views on the practical arrangements by which employers will be required to enrol workers into a workplace pension scheme, including the circumstances and arrangements for postponement of automatic enrolment, where appropriate. It is also looking at the information which employers are required to provide to their workers and to pension schemes and the arrangements by which individuals can opt out of pension saving following automatic enrolment. The consultation runs until 3 June 2009.

Steve Folkard, head of pensions and savings policy at Axa Life says: “It is good to have the opportunity to consult on the important detail of the new duties that employers will have in the run up to the launch of personal accounts, but I am concerned that employers are in a very different place from 12 months ago.

“If employers have to test contributions for individual members retrospectively against the personal accounts earnings band (and then make good any shortfall) it will cause concern amongst employers. Anything which makes it more onerous or expensive for employers to comply with regulation could force them to seek cheaper alternatives, such as reverting to the personal accounts earnings band at the expense of lower paid workers.

“We have been asking for certification to be at scheme level to avoid the need for testing of each individual member’s benefits with all the time/cost that would involve so that employers do not find themselves with an unnecessary administration burden.

“I am sure that unions will have identified this as a potential risk to the benefits of many of their existing members who currently enjoy good provision.”

Maggie Craig, director of life and savings at the ABI says: “Right now there are almost five million employees who could be members of their workplace pension, getting contributions from their employer and free money from the Government. It would be a significant boost for retirement saving if employers who want to offer that benefit to staff before 2012 were able to do so, and we urge the Government to allow that to happen.”