Auto-enrolment and NEST

The National Employment Savings Trust (NEST) has published a response to proposed changes to NEST's rules.

On 26 February 2013 the Pensions Regulator published a research report on Employers' awareness, understanding and activity relating to workplace pension reforms, Autumn 2012.

A guide to using our materials to help train new pensions lawyers.

On 1 February 2013, the National Employment Savings Trust (NEST) published its response to the DWP's call for evidence on supporting automatic enrolment.

The National Employment Savings Trust (Amendment Order) 2013 has been laid before Parliament and is scheduled to come into force from 1 April 2013.

The Pensions Regulator has updated a five-step checklist for trustees of existing occupational pension schemes to help them prepare for automatic enrolment.

The Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) (No. 3) Regulations 2012 (SI 2012/2691) were made on 25 October 2012 and came into force on 1 November 2012. (free access)

HM Revenue & Customs has published details of its most recent updates to the registered pension schemes manual (RPSM).

The Department for Work and Pensions (DWP) has published a consultation paper, Automatic enrolment earnings thresholds: review and revision 2013/14. (free access)

The Department for Work and Pensions (DWP) has confirmed that the requirement on employers to designate a stakeholder pension scheme is likely to be abolished on a single date. The current intention is for this to be 1 October 2012.

The Department for Work and Pensions has published its response to the consultation on the Occupational Pension Schemes (Disclosure of Information) (Amendment) Regulations 2012 (SI 2012/1811), which have been made and will come into force on 1 October 2012.

The Pensions Act 2011 (Commencement No.3) Order 2012 (SI 2012/1681) and the Pensions Act 2008 (Commencement No.13) Order 2012 (SI 2012/1682) came into force on 30 June 2012. These statutory instruments bring into force key provisions of the new auto-enrolment regime. (free access)

HM Revenue & Customs has updated its salary sacrifice guidance to take into account the interaction with automatic enrolment.

The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012 (SI 2012/1506) has been made.

An "Ask the team" article about how the new employer pension duties apply to employment agencies.

The government has published its response to the Work and Pensions Committee report on Automatic enrolment in workplace pensions and the National Employment Savings Trust.

The Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2012 (SI 2012/1257) have been finalised. (free access)

The Department for Work and Pensions (DWP) is consulting on a technical change to the rules governing whether career-average schemes count as qualifying schemes for auto-enrolment.

The Pensions Regulator has published guidance on how employers may bring forward their auto-enrolment staging date. (Free access.)

The DWP has published a response to its consultation exercise on proposals for the earnings trigger and qualifying earnings band to be used for the initial year of auto-enrolment.

The Pensions Regulator has published a strategy document, Delivering successful automatic enrolment. (Free access.)

HMRC has published the Finance Act 2004, Section 180(5) (Modification) Regulations 2012. NOTE: These regulations came into force on 1 June 2012 in respect of any payments made on or after 6 April 2012 - the Finance Act 2004, Section 180(5) (Modification) Regulations 2012 (2012/1258).

The Department for Work and Pensions (DWP) has published a response to its July 2011 consultation exercise on amendments to regulations implementing pension auto-enrolment. Four sets of draft regulations have been finalised.

Two commencement orders have been made, The Pensions Act 2008 (Commencement No. 11) Order 2011 and The Pensions Act 2011 (Commencement No. 1) Order 2011, bringing into force certain provisions of those Acts on 1 and 3 January and 6 April 2012.

The Pensions Regulator has published Six principles for good workplace DC. This is part of its ongoing dialogue with the pensions industry aimed at improving the design and governance of workplace defined contribution schemes.

The deadline for practising solicitors in England and Wales to complete their continuing professional development (CPD) is 31 October 2011. CPD points can be gained by listening to PLC Pensions' podcast, Getting ready for auto-enrolment: key pensions issues.

The NAPF has responded to the DWP’s formal consultation paper, Workplace pension reform: Completing the legislative framework for automatic enrolment, published in July 2011.

In his speech at the CBI conference, Pensions Minister Steve Webb outlined his plans for future pensions policy. (Free access).

The Pensions Bill 2011 has completed its committee stage in the House of Commons.

Amendments to the auto–enrolment provisions in the Pensions Bill 2011 have been approved by the House of Commons Public Bill Committee.

The Pensions Regulator has issued a five-step automatic enrolment checklist for trustees of existing occupational pension schemes which are being considered for automatic enrolment. (Free access)

The Pensions Bill 2011 has had its third reading in the House of Lords.

The National Employment Savings Trust Corporation Regulations 2011 (SI 2011/673) have been finalised.

The DWP has published a call for evidence, Preparing for automatic enrolment: Regulatory differences between occupational and workplace personal pensions.

The Pensions Bill 2011, which contains provisions on auto-enrolment, section 251 and the switch to CPI, has been introduced into Parliament. For more information see Practice note, Pensions Bill 2011: overview, which sets out the main provisions of the Bill and highlights some action points for practitioners. 

NEST has published a briefing note on the charging structure for the NEST pension scheme.

The FSA is consulting on changes to its handbook to reflect forthcoming workplace pension reforms.

On 20 October 2010, HM Treasury published its Spending Review for 2010.

The Department for Work and Pensions has published a research report about employers' attitudes to the forthcoming auto-enrolment reforms.

The Department for Work and Pensions has published a research report about small employers' information needs relating to auto-enrolment.

The Department for Work and Pensions has called for views on the auto-enrolment regime.

The DWP has published its consultation report on workplace pension reforms: qualitative research with small and medium-sized companies.

The DWP has announced terms of reference for the review of auto-enrolment and NEST.

The Pensions Regulator has published its corporate plan for the years 2010 to 2013.

The Department for Work and Pensions (DWP) has published its response to the consultation on guidance for the use of default options in workplace personal pension schemes.

Eleven sets of regulations relating to implementation of the 2012 pension reforms have been laid before Parliament and the Department for Work and Pensions has issued a response to its September 2009 consultation exercise on the draft versions.

The Personal Accounts Delivery Authority (PADA) has published a response following its May 2009 discussion paper on investment issues.

The DWP and Personal Accounts Delivery Authority have published a summary of responses to the consultation paper on the draft scheme order and rules.

The Department for Work and Pensions is consulting on the latest tranche of draft regulations and guidance about the 2012 personal accounts reforms.

The Personal Accounts Delivery Authority has launched a programme to explain how the personal accounts scheme will fit into the pensions landscape from 2012.

The Personal Accounts Delivery Authority has published its annual report and accounts for 2008/09.

The National Association of Pension Funds and Local Government Employers, the body representing employers in the Local Government Pension Scheme, have published their responses to draft regulations issued for consultation by the Department for Work and Pensions concerning the forthcoming automatic enrolment requirements.

Pensions minister Lord McKenzie gave a speech to the Financial Times buyout and de-risking summit on 19 May 2009.

The DWP and Personal Accounts Delivery Authority have published a joint consultation paper on the legal framework for the personal accounts scheme.

The Department for Work and Pensions has published a report on the findings of research carried out in April 2008 regarding employers and the workplace pension reforms.

The Department for Work and Pensions is consulting on two sets of draft regulations relating to Personal Accounts, the draft Pensions (Automatic Enrolment) Regulations 2009 and the draft Pensions Regulator (Delegation of Powers) Regulations 2009.

The Pensions Act 2008 (Commencement No. 2) Order 2009 (SI 2009/82) has been made.

A look ahead at likely developments in pensions law in 2009.

The Pensions Act 2008 has been published, following completion of its progress through Parliament.

As well as implementing the new automatic enrolment and compulsory employer contribution rules from 2012, the current Pensions Bill contains several additional provisions affecting occupational and personal pension schemes. In Pensions Bill 2007/08: a quick guide, we summarise the key aspects of the Bill. The Bill completed committee proceedings in the House of Lords in July 2008, and its report stage has been fixed for 7 October 2008. We will keep the guide updated to reflect any further changes to the Bill between the report stage and the date the Bill receives Royal Assent.

Further amendments to the Pensions Bill have been considered during the committee stage in the House of Lords. On 14 and 16 July 2008, debate focused on the proposed changes to the Pensions Regulator's anti-avoidance powers (see Legal update, Extending the Pensions Regulator's powers: government amendments to Pensions Bill tabled). Introducing the amendments, Pensions minister Lord McKenzie of Luton noted that the "material risk prompting these changes are those actions that singularly or collectively weaken the employer covenant standing behind the pension scheme". Acknowledging concerns expressed during the DWP's recent consultation that insufficient detail will be included in primary legislation, he announced that the government would bring forward more detailed clauses over the summer and also consult formally on draft regulations. Further, the Pensions Regulator plans to issue guidance on how it will implement the new powers. The report stage of the Bill has now been delayed until 7 October 2008. Among general comments, the minister noted that the planned removal of the "good faith" test had generated controversy, but the minister suggested that keeping this test would be inconsistent with the move to examining the effect of a transaction rather than its intent. Apparently the government is considering alternative suggestions that have been put forward. Several government amendments previously tabled were agreed in committee, including the regulation-making

The government has announced plans to amend the Pensions Bill, currently going through the committee stage in the Lords, to prevent employers offering financial inducements to their employees to opt out of membership of workplace pension schemes after the automatic enrolment requirements come into force in 2012. Amendment 106A introduces a new clause in the Bill, which provides that an employer will face a compliance notice from the Pensions Regulator if it takes action for the "sole or main purpose" of inducing an employee or worker to opt out of a personal accounts scheme or the employer's own qualifying scheme. The DWP says that inducements caught by the provision would include higher salaries or one-off bonuses. These amendments follow previous amendments, now inserted as clauses 49 to 52 in the Bill, which are designed to stop employers favouring interview candidates who will opt out of the employer's scheme (see Legal update, Government plans amendment to the Pensions Bill to prevent pensions discrimination at job interviews). See Pensions Bill: Second marshalled list of amendments to be moved in committee and Press release: Ban on encouraging or forcing workers to opt out of pension saving, DWP, 24 June 2008.

The government plans to amend the Pensions Bill 2007 to allow automatic enrolment into workplace personal pensions as part of the 2012 pensions reforms. The Bill already allows for auto-enrolment into occupational pension schemes (including personal accounts) but there were concerns that extending this to contract-based schemes would breach European consumer protection directives. Until now, the understanding has been that the directives prohibit contract-based schemes from automatically enrolling employees. Instead, these schemes have to operate an opt-in method (normally meaning that an employee has to sign an acceptance letter to join). The European Commission has now confirmed to the DWP that automatic enrolment into personal pensions that are provided by the employer (such as group personal pension plans, group SIPPs and group stakeholder schemes) will not offend the EU directives. This does not include personal pension arrangements that employees have obtained for themselves (even if their employer contributes to them). For the current draft of the Pensions Bill 2007, see Public Bills before Parliament: Pensions Bill. See Press release: Millions of savers to benefit from auto-enrolment into workplace schemes, DWP, 16 May 2008.

On 22 April 2008, the Pensions Bill received its third reading in the House of Commons. Several Opposition amendments were withdrawn or defeated. These included an attempt to fix the start date for personal accounts as 1 April 2012, to cap the annual management charge at 0.3% and to require the Personal Accounts Delivery Authority (PADA) to adhere to United Nations responsible investment principles. The Opposition also queried the extent of PADA's expenditure on external consultants. Minister for Pensions Reform Mike O'Brien said these amendments were premature, as PADA was still finalising its plans for implementing the reforms, including the timetable. He said that the government intended to introduce the reforms on time and on budget, and promised to publish a report prepared by Tim Jones, PADA chief executive, on progress in the implementation plans. The government also defeated an attempt to force it to confirm when the so-called earnings link will be restored. Mr O'Brien indicated that this would be between 2012 and 2015, depending on the state of the public finances. Several new clauses introduced by the government were added to the Bill. New clauses 17 and 19 extend the employer duties in relation to automatic enrolment and minimum contributions to Crown employees and the police respectively. New clause 18 excludes the armed forces from the reforms (including reserve forces). The Bill now moves to its first reading in the House of Lords. See Public Bills

A new version of the Pensions Bill has been published, incorporating the amendments agreed during the committee stage in the Commons. Government amendments include: New clause 8, which provides that if an employee does not qualify for automatic enrolment into personal accounts or a qualifying private sector scheme because his or her earnings are below the annual £5,035 limit, the employee can require the employer to enrol him or her into a personal accounts or qualifying private scheme. The employer will not be required to make any contributions. New clauses 26 and 27, which set out transitional phasing-in provisions for the employer contribution requirements (see Legal update, Pensions Bill: government amendments agreed in committee). New clauses 49 to 52, which are designed to stop employers asking job applicants whether they plan to opt out of auto-enrolment. The Pensions Regulator is given powers to issue compliance notices to employers who contravene this obligation, and penalty notices to those that flout compliance notices (see Legal update, Government plans amendment to the Pensions Bill to prevent pensions discrimination at job interviews). New clause 108, which expands the Regulator's powers to appoint independent trustees (see Legal update, Pensions Bill: new clause will widen Pensions Regulator's trustee appointment powers). New clause 109, which gives the Regulator power to intervene if it considers that a scheme's trustees have failed to observe the

The government is planning an amendment to the Pensions Bill to prevent employers from asking applicants about their pensions at job interviews. The proposal flows from concerns that employers could undermine the new personal accounts system scheduled for 2012, which will force employers to contribute 3% of an employee's earnings to a personal account unless an employee opts out. Concerns have been raised that by quizzing candidates at the interview about opting out, employers could implement a policy of hiring only those candidates who wish to opt out of the system. It is not clear whether candidates who have been discriminated against in this way will be able to seek compensation or other redress at an employment tribunal. The Engineering Employers' Federation has written to MPs that it will oppose any clause in the bill that gives individuals a right to go to an employment tribunal. But the TUC has insisted that such a measure is vital to the success of the personal accounts system. See Commons Committee stage debate of the Pensions Bill on 15 January 2008, House of Commons, UK Parliament and Government plans Pensions Bill amendment to prevent pensions discrimination at job interviews, Personnel Today, 14 January 2008.

Following last week's publication of the Pensions Bill (see Pensions Bill published: automatic enrolment and minimum employer contributions from 2012), the Department for Work and Pensions has published an impact assessment. The paper reveals the significant costs of the introduction of the personal accounts regime, automatic enrolment and minimum employer contributions. Key points are as follows: Employers are estimated to have to pay £2.9 billion in pension contributions once the new regime has been implemented. Individual contributions are estimated as £7 billion annually, and government costs are estimated at £2 billion (including tax relief, state second pension, and benefits costs). Employers will be liable to pay significant administrative costs, which will vary depending on whether they subscribe to the central personal accounts scheme or run their own qualifying scheme. Companies operating personal accounts will face costs of £300 million in the first year, which will fall to £89 million a year in the future. Companies which operate an alternative qualifying scheme will face costs of £50 million in the first year, and ongoing costs of £12 million annually. The disparity arise from the significantly greater costs involved in preparing for personal accounts, registering employees, undertaking auto-enrolment and collecting and administering contributions. The reduction in the revaluation requirements for deferred pensions that will be implemented in t

The Pensions Policy Institute (PPI) has published an analysis of the likely impact of the introduction of personal accounts, planned for 2012. The report considers the possible effects of the introduction of the new personal accounts scheme on the number of people saving in work-based schemes and the total amount saved in these schemes. The analysis concludes that although the number of people saving in occupational pension schemes is likely to increase (possibly by up to 9 million), the overall success of the reforms depends on employers' responses. By comparing the outcome of four theoretical employer responses to the reforms with a "baseline" scenario without any reform, the PPI shows the range of potential outcomes for pension saving. According to the PPI models, if fears of employers levelling down their contributions after personal accounts are introduced prove unfounded, annual pension contributions could increase by around £10 billion. But if no employers offer more than the minimum 3%, pension contributions could be as much as £10 billion lower. If employers reduce their contributions to keep their costs constant, or if some employers close their existing schemes or reduce their contributions, overall pension contributions might still be higher than without the reforms, by between £2 and £5 billion. See Press release and Report: Will Personal Accounts increase pension saving?, PPI, 22 November 2007.

As expected, the government's legislative programme for the new Parliamentary year, announced this week in the Queen's Speech, includes details of a Pensions Bill.

On 26 July 2007, the Pensions Act 2007 received Royal Assent. In the last-minute parliamentary "ping-pong" between Houses, the government refused to accept House of Lords' amendments which would have created a pension protection lifeboat fund and unclaimed assets agency (see Legal update, Pensions Bill: Lords amendments overturned). But the government accepted an amendment which provides for post-legislative scrutiny of the operation of the Act by the end of 2014 (section 24). The government also accepted an opposition amendment that will temporarily prohibit schemes that qualify for the Financial Assistance Scheme (FAS) from buying out benefits with insurers for nine months, unless the Secretary of State for Work and Pensions approves the transaction (section 19). Additionally, the government has announced that it has accepted the recommendation made by the Young review not to enforce a cut-off date for employer insolvency (see Legal update, FAS review of scheme assets: interim report published). The government had previously decided that for schemes to be eligible for the FAS, an employer insolvency event must have occurred by 31 August 2007. We will publish a full practice note summarising the main provisions of the Act in due course. See Commons Hansard, 25 July 2007 and Pensions Bill: progress.

On 11 July 2007, the Pensions Bill received its third reading in the House of Lords. An amendment introduced by Lord Fowler was agreed, despite government opposition, which will provide for post-legislative scrutiny of the Bill four years after its enactment. An updated version of the Pensions Bill had previously been published following the committee and report stages in the House of Lords (see Pensions Bill). A summary of the amendments made in the Lords has also been published before the Bill returns to the Commons (see Lords amendments to the Pensions Bill). Amendments include a new clause 1(4) that was passed at the report stage on 4 July 2007. This provision will enable anyone below state pension age to pay voluntary class 3 National Insurance contributions at any time before retirement and buy additional basic state pension rights for up to nine years. Currently, individuals may only pay class 3 contributions for the preceding six years. See Lords Hansard: Pensions Bill, 11 July 2007 and Public bills before Parliament: Pensions Bill.

The report stage of the Pensions Bill will take place in the House of Lords on Wednesday 4 July 2007. The Bill received its second reading in the Lords on 14 May 2007, and a new version has been published following amendments subsequently made in committee (see Legal update, Pensions Bill: updated version published). At the report stage, the government may attempt to remove the amendments made in committee relating to the pensions lifeboat fund (see Legal update, House of Lords votes for pensions lifeboat fund). See House of Lords, future business.

An updated version of the Pensions Bill has been published, following the committee stage in the House of Lords (see Pensions Bill). The new version incorporates various amendments, including several introduced by the government. Of these, the most significant relate to the existing provisions in the Bill that will abolish contracting-out of the state second pension on the defined contribution basis. In particular, most of the rules contained in existing regulations that require separate tracking of protected rights will now be removed. But the requirement that schemes should pay (or secure) dependants' pensions for surviving spouses or civil partners will be retained. The Bill also contains the new clauses relating to the pensions lifeboat fund and unclaimed assets recovery agency, inserted following the government defeat in the Lords last week (see Legal update, House of Lords votes for pensions lifeboat fund). These provisions are likely to be removed when the Bill returns to the Commons for its third reading. See Public Bills before Parliament: Pensions Bill.

The Department for Work and Pensions (DWP) has announced that the new system of personal accounts, due to be introduced in 2012, will be run by an occupational pension scheme established under trust. John Hutton, Secretary of State for Work and Pensions, said that the scheme would face "the same level of regulation as all other trust-based occupational schemes". The personal accounts scheme will be run by a board of trustees, who will be independent of the government. Additionally, a members' panel will be set up to nominate a proportion of the trustees. The trustees will consult the panel on key decisions. Mr Hutton said that the government's priority was to focus the scheme on its target group: namely, employees who did not have access to a good occupational scheme. Some commentators may interpret this as an indication that the government intends to reverse its decision to increase the annual limit on contributions to £5,000, following sustained lobbying by the pensions and insurance industry (see Legal update, News round-up for the week ending 25 May 2007: Debate continues over personal accounts contribution cap). See Press release, Consumers to be at heart of new pensions saving scheme, DWP, 24 May 2007.

The Pensions Bill is to receive its second reading in the House of Lords on Monday 14 May 2007. For a copy of the bill in the form sent to the Lords, see Pensions Bill (HL Bill 61 06-07). (See House of Lords business.)

The Pensions Bill received its third reading on 18 April 2007. The government also announced that the Financial Assistance Scheme would be extended to cover some solvent employers. Opposition amendments designed to create a pension protection lifeboat fund were defeated.

The Pensions Bill has completed its committee stage, and next moves to the report stage. In the meantime, notice of an amendment has been given to offer compensation for those individuals who fall within the judgment in R (on the application of Bradley and others) v Secretary of State for Work and Pensions. The amendments proposes extending the financial assistance scheme set up under the Pensions Act 2004. The government is unlikely to accept this clause.

The government has issued a White Paper setting out its proposals for reform of the UK state pension scheme.

The Pensions Commission chaired by Lord Turner published its second report on the reform of pension provision in the UK. As expected, it recommends increasing the state retirement age and introducing a funded national pension savings scheme. Membership of the new scheme would be automatic unless the employee opted out or the employer offered an adequate alternative pension arrangement. Contributions would be compulsory for employees and employers. The report also proposes linking state pension increases to pay, not price, inflation and reducing means-testing to a minimum.