Need to know:
- Staying informed about regulatory changes around pensions ensures employers can respond quickly and in an educated fashion.
- The multitude of regulatory changes in recent years mean that employers and trustees may be focusing more on keeping pace than developing effective long-term strategies.
- Organisations can engage their employees in managing pensions change, by making individuals responsible for keeping up to date with developing regulations.
From the introduction and implementation of auto-enrolment and pension freedoms, to the latest developments regarding master trusts and annual authorisation, the pensions industry has experienced a multitude of regulatory changes in recent years.
How can employers ensure that they keep pace with the seemingly ever-changing pensions landscape, and avoid succumbing to regulatory fatigue?
An evolving industry
One of the most significant changes over the past six years has been the phased introduction of mandatory employer contributions into a qualifying workplace pension scheme through automatic enrolment. The next, albeit not necessarily final, change to minimum employer and overall contributions occurred on 6 April 2019.
Additionally, as of 1 October 2018, new rules require master trusts to apply annually to The Pensions Regulator (TPR) for authorisation to continue operating; master trust providers have until 31 March 2019 to submit the first application.
Employers may face considerable challenges if their master trust either did not apply for authorisation to continue to operate by 1 April 2019, or applied and failed to get authorisation from TPR, says Anne-Marie Winton, partner at ARC Pensions Law.
Tom Partridge, partner in the pensions advisory practice at Deloitte, agrees: “This poses a number of new challenges. [While] most trusts anticipate a significant timeframe to prepare applications, some are yet to consider the additional resourcing and different skill sets that will [be] required to meet the task at hand.”
Pension freedoms, which took effect in 2015, are another example of regulatory change and the sector taking time to implement practical, scalable solutions, adds Debbie Falvey, defined contribution (DC) proposition leader at Aon.
“Change fatigue around DC means that employer and trustee time and attention are taken up ensuring they are keeping up with the change and not in good, long-term strategy work,” she explains. “It would be good to have a period of stability so we can focus on the real issues, such as increasing contributions beyond auto-enrolment minimums, getting DC members to take ownership of their retirement planning and choices, and recognition that wider financial education might be the key in managing debt levels and increasing savings rates.”
Employees at the forefront
Smaller employers without access to pensions expertise and support could find the task of keeping pace with change more onerous. One solution could be to give ownership to a particular employee to stay engaged with regulatory changes, suggests Peter Bradshaw, director at Selectapension.
He says: “Another option for smaller employers is to ask their [business] accountant to take ownership of responsibility for regulatory changes, while employers themselves can network and join local business groups, such as Chambers of Commerce, to share experience and knowledge of their regulatory responsibilities.”
Either way, being informed and staying on top of changes is key.
Keenan says: “By staying up-to-date with regulation changes, employers can make sure they are well read and able to respond quickly and in an informed way.
“Employees value employers [that have] financial wellbeing as part of their packages and so this is an important issue in the increasingly tight war on talent in the UK.”
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