The government has launched a consultation outlining its plans to simplify the auto-enrolment process and help reduce burdens on employers.
A Department for Work and Pensions (DWP) consultation, Technical changes to automatic-enrolment: consultation on draft regulations, sets out a number of changes to legislation designed to make life easier for all organisations.
The draft proposals include measures to:
- Introduce an alternative quality requirement for defined benefit (DB) pension schemes.
- Simplify the requirements on employers regarding the provision of information about automatic-enrolment to their employees.
- Create exceptions to the employer duties so that an employer is not required to enrol an employee into a workplace pension in certain situations.
Under draft proposals, organisations will no longer be legally bound to enrol employees who have accrued savings above the lifetime allowance and taken out enhanced or fixed protection.
A similar exemption will also be granted in respect of: employees who have handed in their notice within six weeks of the employer reaching its staging date; contractually enrolled members who have quit the scheme within 12 months of their auto-enrolment date; and those who have been paid winding up lump sums which prevent them receiving further pension accrual.
The government’s measures propose a simplified test for DB schemes to prove they are good enough for use under auto-enrolment.
It also wants to reduce the amount of information employers are required to give to different types of employee from five to three.
The DWP will publish a response to the consultation in January 2015.
The regulations, which would then come into force in April 2015, would amend the existing Occupational and Personal Pension Schemes (Automatic-Enrolment) Regulations 2010.
David White, managing director of Creative Auto Enrolment, said: “We welcome the latest government announcement, calling for auto-enrolment to be simplified.
“We hear time and time again from employers that are baffled by the layers of complex legislation that they are responsible for and understandably so.
“The proposed changes are sensible and we support any measures that simplify the process for employers.”
Simplification of the rules around auto-enrolment is long overdue and these easements recognise the realities of life for many employers. There is still a long way to go to make the process anything like as straightforward as most employers expect it to be and I suspect that many employers have taken practical shortcuts that may be technical breaches of the current rules.
The Pension Regulator has been pragmatic so far, but their recent fines are an indication that flagrant non-compliance will not be tolerated and employers must meet their legal obligations, even if ithe process remains over complicated.
Hopefully these proposals are enacted and further simplification follows, sooner rather than later.
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