If you read nothing else, read this . . .
• The Pensions Regulator’s role is to ensure all UK employers are compliant with the Pensions Act 2008 and to enforce auto-enrolment.
• The Department for Work and Pensions makes policy decisions. It has overall responsibility for the shape of the 2012 reforms.
• Nest Corporation is responsible for the national employment savings trust (Nest), which is obliged to accept any employer.
Key industry organisations and government bodies are working together to ensure the 2012 pension reforms go through as smoothly as possible, says Jennifer Paterson
Nest Corporation is responsible for providing the national employment savings trust (Nest), which is designed for low-to-medium earners.
Nest has a public service obligation, so must accept any employer. Chief executive Tim Jones says: “Nest is the scheme that likes to say ‘yes’, so our job is to say ‘yes’ to any employer of any size that wants to use us for some, or all, of its response to the employer duties. That puts us in the same position as other schemes, but the big difference is that the other schemes do not have to say yes.”
Nest will be regulated by the same principles as all qualifying schemes. Jones adds: “It has a statutory duty to maximise compliance with the new employer duties. We are likely to have a lot of the employers that are not attracted to obeying those duties coming to us, so The Pensions Regulator and Nest will need to work together as we see how the reforms play out.”
TPR’s role is to ensure all UK employers meet their duties under the Pensions Act 2008, including automatically enrolling all staff into a qualifying scheme.
Bill Galvin, chief executive of TPR, says: “We also have the statutory objective to protect members’ benefits. This includes members of defined contribution (DC) schemes and involves ensuring all schemes available for auto-enrolment are well run and are capable of delivering good outcomes for members.”
TPR will focus on the largest 600 employers, which have more than 6,000 staff and represent about one-third of the working population. The staging date for these organisations to comply with the reforms is during the first six months after these come into effect in October 2012. “We are taking a very proactive approach with this group, working one to one with key representatives,” says Galvin. “All 600 will have the opportunity to meet with TPR’s specialist large employer engagement team.”
This group of employers is deemed to be important to the success of auto-enrolment, because the way it responds to this and to other processes will influence the way all other employers respond.
When it comes to medium-sized employers with 50 to 249 staff, which will be staged in before August 2014, TPR will rely heavily on the pensions advisory community to assist.
For small employers with one to 49 employees, most of which will have staging dates from 2015, TPR recommends obtaining support from non-pension specialists, such as accountants and independent financial advisers.
TPR will send out at least two direct letters to all employers, 12 months and three months before they reach their staging date.
Every employer will also need to register with TPR once they are compliant.
The DWP makes policy decisions and has overall responsibility for the shape of the pension reforms.
It will run a communications programme to explain the policy to individuals, so they know why the reforms are being introduced. It also aims to convince small and medium-sized employers that pensions provision is a key part of an employer’s role.
A DWP spokesperson says: “We are responsible for the pensions reform policy, the legislation, communicating the changes, and providing information about the nature and impact of the changes to individuals.
“Delivery of the reforms is the responsibility of the Enabling Retirement Savings Programme, led by DWP, with support from The Pensions Regulator and Nest Corporation.”
Read more about the 2012 pension reforms