Background
The Pensions Bill will be having its second reading in the House of Commons on 7 January 2008. This Bill is the final part of the implementation of the Government’s comprehensive and inter-related package of reforms to the UK’s pensions system. We have explained what the Bill contains in a previous article.
In advance of the Bill’s Second Reading, EEF has prepared a detailed briefing (used to brief MPs, journalists and various stakeholders) setting out our general comments on the Pensions Bill and identifying some specific areas of concern which we consider still need to be addressed by the Government. A copy of the briefing can be downloaded here.
General comments
We have stressed the importance of maintaining the broad consensus that has been reached, both across the political spectrum and amongst stakeholders, on the implementation of the Government’s pensions reform programme. We have also stated that we fully support the introduction of:-
- The new-low cost personal accounts scheme with auto-enrolment and compulsory minimum contributions. Providing personal accounts are simple for employers to administer and individuals to understand, we believe that they will help to achieve the Government’s objective of encouraging more people to save for their retirement.
- Some deregulation of occupational and private pensions which will be a welcome supportive message for those employers who are voluntarily providing occupational pension schemes for their employees. Whilst the proposed reduction in the annual “cap” on revaluing deferred pensions from 5% to 2.5% is an encouraging first step, the Government must now build on this by introducing statutory override to help employers introduce this proposed change.
Concerns about personal accounts
We have identified a number of concerns about personal accounts that we consider still have to be addressed and resolved by the Government. In some cases, this needs to be done during the Pensions Bill’s passage through Parliament. In other cases, they are not issues that we feel need to be addressed through the Pensions Bill itself but they will need to be resolved by the Government before personal accounts are introduced in 2012.
Examples of the former issues are:-
- The lack of detailed information about the annual contribution limit for employee/employer contributions into personal accounts
- Some details of the enforcement/compliance regime for the new employee/worker rights that are being introduced by this Bill
- Issues relating to auto-enrolment into Workplace Private Pensions (WPPs).
Examples of the latter issues are:
- The need for the Government to provide some initial financial assistance for smaller employers when personal accounts are introduced in 2012
- The difficulties that will be created for some people by the interaction of personal accounts with means-tested benefits.