Employee Benefits Summit 2010: 2012 pension reforms must be simplified

The new Conservative/Liberal Democrat government must simplify the rules around 2012’s incoming pensions reforms if the new legislation is to work.

Speaking on pension commitments for employers in the run up to 2012 on the first day of the Employee Benefits Summit in Monte Carlo, Jim Bligh, senior policy adviser-employment and pensions at the Confederation of British Industry (CBI), said the new legislation should offer greater flexibility for employers.†

For example, it could allow employers to auto-enrol staff into an occupational pension scheme or national employment savings trust (Nest) after one or three months’ service rather than at the beginning of their employment. This would remove the need for employers to refund contributions to staff if they subsequently opted out, which may involve a complex process.

This alteration to the rules would also benefit organisations which take on a large seasonal workforce, because they would not have to automatically enrol all temporary staff on day one of their employment.

Bligh added that the new legislation must also not be allowed to damage employers’ existing pensions provision. There is currently a real danger that employers could level down their provision to the minimum standards set out under the Pensions Act 2008, he said. “Nest has got to complement the industry and not undermine higher provision,” he said. “Offering good perks is the right thing to do. The message to government is [it has] to simplify its rules if this is going to work.”

Employers could face the further problem of increased costs incurred as a result of complying with the legislation, said Bligh.

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