CBI plea for simplicity for exempt schemes

The CBI is calling on the Government to keep employer duties for those wanting to opt out of personal accounts as light as possible or face mass levelling down.

Speaking at the Corporate Adviser DC Summit, Jim Bligh, senior policy adviser, employment and pensions at the CBI, said making pensions palatable was crucial if employers are to remain engaged with schemes.

He described the first draft of regulations issued by the DWP as “absolutely atrocious”, but accepted that the Department had got into listening mode once it realised how problematic its proposals were perceived by business.

Adviser delegates echoed his worries in a poll taken at the Summit. A huge majority, 89 per cent, said they thought the Government had not done enough to reduce the risk of levelling down.

Bligh cited the case of one of the UK’s biggest supermarkets which currently has a DB scheme for most of its employees, with a waiting period of 18 months. He suggested it was highly likely the organisation would opt for personal accounts rather than jump through the hoops required to be compliant as an exempt scheme.

Bligh said: “The DWP overconsulted and underlistened. In fact I would say they consulted too much and didn’t listen at all. The second batch is a lot better. But what we keep hearing from employers is ‘if you put too many blocks in the way, we are going to opt out’.

“What about companies with waiting periods? Are they going to put members into personal accounts in the waiting period or into their own tailored DC? What would be easier would be to put them into personal accounts, because otherwise you have to go into individualised checking, you have to make sure everyone is compliant every single year, you have got to possibly test every single pay packet, you have got to go through various different hurdles with the Pensions Regulator, with DWP, and all kinds of other bizarre organisations.

“If you build a pensions system that is predicated on the basis that people won’t comply, then employers will say ‘fine, we will level down, and put our staff into personal accounts.”