Professional Pensions has reported that the rule which allows companies with defined benefit or hybrid schemes to postpone automatic enrolment until 2017 was originally brought in to align benefits and contributions for defined contribution schemes and DB schemes by 2017. However, Lane Clark and Peacock principal Andy Cheseldine said when the legislation was passed in 2008 it included every hybrid scheme, even those with closed DB elements or DC schemes including life cover. He said companies which only use the DC part of their hybrid scheme could take advantage and postpone AE. He added: "We estimate that over 3,000 private sector employers were due to auto-enrol more than four million workers in 2013 and the majority of these enrolments could be pushed back to 2017 without any compensatory backdating. We understand that primary legislation will be required to rectify this situation."
LCP raised the issue with the Department for Work and Pensions last week and is yet to receive a formal reply.
A spokesperson for the DWP said: "We are grateful to LCP for bringing this to our attention and are looking at the issue. Our intention remains that transitional arrangements only apply to employers who automatically enrol their existing workforce into the hybrid or defined benefit element of their pension scheme.
"In addition, all new members of staff joining these firms after their staging date will be automatically enrolled - and existing staff can still choose to opt in."
DWP WILL STOP AUTOMATIC ENROLMENT SCHEMES IF CHARGES ARE TOO HIGH
29 November 2012
The Department for Work and Pensions has threatened to remove schemes from automatic enrolment if it deems their charges too high.
The Department for Work and Pensions (DWP) has threatened to remove schemes from automatic enrolment if it deems their charges too high.
In the DWP’s report on reforming private sector pension schemes Reinvigorating Workplace Pensions , it states they are keen to develop a better system for monitoring charges across all schemes.
Professional Pensions reports:
"Our research shows that charges have fallen steadily over time and so far evidence suggests that this trend will continue," the report said.
"However, we are monitoring charges, including consultancy charges, very closely and have been clear that we will take prompt action if we see evidence that charging structures are being used inappropriately or if charge levels are excessive. "We have powers to stop a scheme from being used for auto-enrolment if its fees are too high or if members are required to pay for anything which doesn't deliver them a pension benefit. We could take action within months so the industry has every incentive to do the right thing.
"We are keen to continue to develop the monitoring regime for charges, which currently consists of a regular survey of trust and contract-based schemes, to ensure that we have a
CIPP Policy News Journal
12/04/2013, Page 253 of 362
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