Regulations have been laid before Parliament to relax the criteria in relation to whether a career-average revalued earnings scheme ("CARE scheme") will constitute a qualifying scheme for auto-enrolment purposes.
Currently, a CARE scheme will only count as a qualifying scheme if it revalues benefits at a rate that is equal to or above a "minimum rate", which is a rate equal to the lesser of the annual increase in RPI, the annual increase in the general level of prices and 2.5 percent. A CARE scheme which revalues benefits on a discretionary basis can also be a qualifying scheme if the scheme's funding reflects the "minimum rate" and this is recorded in the formal funding documents.
Under the amending regulations, further flexibility is being introduced so that CARE schemes whose rules specify a revaluation rate below the "minimum rate" can be a qualifying scheme if the funding of the scheme is based on the assumption that revaluation will be applied at or above the "minimum rate" and the formal funding documentation in place reflects this.
The regulations can be viewed by clicking here.