Pensions - 'landmark reforms'

Or so they have been described by Pensions Minister, Angela Eagle. On 12 January 2010, a package of eleven sets of regulations relating to pensions auto-enrolment and the other employer duties was laid before Parliament.

Plans have been forming for some time to beef up employee pensions, with a marked preference on both sides of the political divide to introduce auto-enrolment – with employees automatically signed up to a scheme unless they opt not to bother. This is a considerable step further than the stakeholder pension rules, which never really had the impact expected.

During 2009, the Department of Work and Pensions conducted three separate consultation exercises on different elements of the new regime. In September they published draft regulations, and have now unveiled a government-established scheme, previously referred to as personal accounts, but now to be known as NEST - National Employment Savings Trust.

From 1 October 2012, employers will be required to auto-enroll workers in a pension scheme and make minimum contributions. That last bit is likely to be the contentious part.

According to Yvette Cooper, announcing these changes:

"All employers will be required to pay into a pension for their workers for the first time. We have responded to the concerns of business to make the introduction of these reforms as straightforward as possible. Start-up businesses will be given valuable extra time to prepare for these changes as we come out of recession.

"The cost to all of us of doing nothing in the face of an ageing society is too great to ignore. Currently 14 million people get no contribution from their employer towards a pension and around 7 million people are not saving enough for their retirement”.

The draft regulations are a complex set of provisions, but there is time to get to grips with them. There will be a staging process for smaller employers, with the smallest given up to four years to comply. Start dates will vary from 1 April 2012 to 1 March 2016.

Detailed rules will have to be mastered regarding the mechanics of the enrolment process, certifying or self-certifying existing schemes, and detailed compliance points, such as reporting obligations, record keeping, interest and penalties for late contributions,

For employers who have not previously had a contributory pension scheme this may be a considerable headache. For advice and guidance, contact Eoin Fowell on 01752 292350 or James Twine on 01752 292351.