Minister of state for pensions, Rosie Winterton announced last month that employers will be able to ‘self certify’ that their pension scheme meets the quality standard based on the expected value of pension contributions to be made over the course of each coming year.
Pension providers and advisers say the move, incorporated in the Pensions Bill, should protect the majority of existing pension plans from being found to fall short of the requirements needed to avoid having to sign up for Personal Accounts. The rules will also mean that employers can take a broad brush approach to whether their employees are making an 8 per cent overall contribution and receiving a 3 per cent employer contribution on qualifying earnings, rather than having to check that every single member of staff is compliant.
Winterton says: “The Government understands the pressures that employers are under at the present time and we are committed to helping them in whatever way we can. These reforms are based on a broad consensus among stakeholders. For our reforms to work it is vital that wherever we can we make them as simple and straightforward for employers to implement.”
Raj Mody, partner, Pricewaterhouse-Coopers LLP, says: “We welcome this development. The provision of a self-certification approach will help employers react to the new Pensions Bill in principle at least. Our own Pensions Survey showed over 40 per cent of companies believe they need to adapt their current pension arrangements, including member joining processes, to accommodate the changes expected in 2012. Many of those companies want to get moving on this as soon as possible to allow an orderly run-up to 2012 without nasty cost surprises.”
Maggie Craig, director of life and savings at the ABI says: “We support the principle of employer self-certification and appreciate the Government’s commitment to it. We remain concerned that the wording of the key amendment to the Pensions Bill on self-certification may not achieve these aims. The current drafting of the amendment adds considerably to the administrative burden for employers and risks discouraging them from continuing to provide pensions to their employees that have higher contributions than the level set for personal accounts.”
