New measures designed to ease the administrative and financial burdens on employers running their own pension schemes when personal accounts come into effect have been announced by Pensions Minister, Rosie Winterton.
Following discussions with stakeholders, employers will now be able to self certify that their pension scheme meets the quality standard based on the expected value of pension contributions to be made each year once the reforms come into effect in 2012. Under the new terms in the Pensions Bill, money purchase pension schemes must have contributions of 8% of a qualifying member’s earnings, of which 3% are made by the employer.
Department of Work and Pensions (DWP) Minister of State for Pensions, Rosie Winterton said: “The amendments will mean that employers who are confident their workers will receive the new minimum level over the year can certify to this extent as opposed to doing so for each individual over each pay period.”
DWP Minister, Lord McKenzie of Luton, added: “Over two million workers currently receive contributions at or above the minimum laid out in the current Bill. We want this to continue. The administration of the quality test is important, and we certainly do not want the new arrangements to undermine existing good provision. The introduction of certification is specifically intended to reduce this risk.”
Winterton also confirmed that the rates for the general levy and the Pension Protection Fund administration levy for 2009/10 would be frozen at this year’s level to avoid putting additional cost pressures on pension schemes in the current economic climate.
She added: “By freezing the general and administration levies at this year’s level, I believe we are meeting the commitment we made last year to provide levy cost stability for pension schemes.”