New regulations in relation to auto-enrolment came into force on 1 November 2012. Essentially, they provide that:
- an average salary scheme where the trustees have a discretionary power (rather than an obligation) to revalue accrued benefits during pensionable service is not a "qualifying scheme" under Section 16 of the Pensions Act 2008; however
- where both the scheme's funding and statement of funding principles take account of the exercise of the discretionary power in providing for revaluation at or above the minimum rate, the scheme is not prevented from being a "qualifying scheme".
Any clients who are considering using or intending to use an average salary scheme as a "qualifying scheme" for the purposes of meeting their auto-enrolment obligations should review their scheme and funding documentation to ensure that these requirements are met.