On 24 September 2009, the DWP published its latest consultation papers on the planned changes to workplace pension provision from 2012.
The first is “Workplace Pension Reform - Completing the Picture” which includes consultation on six new sets of draft regulations. The new consultation includes a revised version of draft regulations issued for consultation in March 2009. This consultation concerns:
- arrangements for implementing the reforms including measures to manage the burdens on business, such as allowing employers to phase in contributions gradually over time;
- elements of the employer duty requirements not covered in the consultation of March 2009 (see our March 2009 update), including:
- pay reference periods;
- voluntary joining for individuals not eligible for automatic enrolment;
- re-enrolment of eligible individuals;
- requirements on employers to maintain membership of a qualifying pension scheme;
- changes to the “19 day rule”; and
- modifications to when postponement can be used for high quality schemes;
- the quality requirements for pension schemes, including self-certification for defined contribution schemes; and
- powers to enforce compliance with the requirements on employers.
It is proposed that the relevant regulations will start to come into force in October 2012. However, the planned reforms introducing auto-enrolment, employer duties and personal accounts will be phased in over a three year period, broadly starting with the largest employers and phasing in medium and smaller employers over the following eighteen months to two years.
Employer contribution levels will also be introduced in stages. Employers using defined contribution schemes will be required to pay 1 per cent of “qualifying earnings” until staging is complete, 2 per cent the following year and 3 per cent thereafter. Employers using defined benefit schemes will be permitted to delay auto-enrolment until after the phasing-in period is complete.
This consultation will run until 5 November 2009. The DWP has reduced the normal 12 week consultation period to 6 weeks on the grounds that it believes employers and others want “early certainty” about the final form of the 2012 regime.
View the consultation paper, to which are annexed the 6 sets of draft regulations.
View the impact assessment.
The second consultation from the DWP, published on the same date is “The use of default options in workplace personal pensions and the use of group self invested personal pensions for automatic enrolment”. This document seeks views on the draft guidance related to the following:
- the design of default options in workplace pension schemes used for automatic enrolment, how they are offered, governance arrangements and communicating the default option, including ongoing communications; and
- the definition of SIPPs and group SIPPs and how they should be structured and offered when used for automatic enrolment.
The consultation runs until 17 December 2009.
View the consultation.
Comment: concerns have been raised over the length and complexity of the consultation process and the volume of draft regulations. We will be examining in detail the provisions for the new 2012 regime for workplace pension provision in one of our future briefings.