Employee Benefits Summit 2011: Auto-enrolment made simpler for employers to administer

Auto-enrolling employees into occupational pensions will be easier for employers to administer following changes currently going through parliament. The changes were made to simplify the legislation which will be introduced as part of 2012’s pension reforms.

Speaking on the 2012 pension reforms at the Employee Benefits Summit in Sintra, Portugal, David Yeandle OBE, former head of employment policy at the EEF, said that the incoming Pensions Bill 2011 now offers greater flexibility for employers.

For the new Bill the government accepted the recommendations of an independent review panel into auto-enrolment, on which he sat. He said: “[The Making Automatic Enrolment Work Review recommended that] all employers should be included but there should be deregulatory changes to existing legislation to make auto-enrolment simpler for employers to administer.”

Recommendations made by the review included: no change in the upper and lower age thresholds for auto-enrolment; employers should have an optional three-month waiting period before auto-enrolling new staff; simple certification system so that employers with defined contribution (DC) schemes can use a different definition of pensionable pay than qualifying earnings; and employers should have three months’ flexibility either side of their scheduled repeat auto-enrolment date; and government should legislate for the removal of the cap on contributions being made to the National Employment Savings Trust (Nest) in 2017.

It also stipulated that the earnings threshold for auto-enrolment should be increased and aligned with threshold for paying income tax, and that the lower point for making pension contributions should be aligned with the national insurance contribution threshold.

Yeandle said: “Earnings levels are dynamic during working life and the national minimum wage is often a stepping stone to higher wages and family circumstances are important. Also, many low earners have a higher earning partner.”

All of the above changes are being implemented through the Pensions Bill 2011, which is expected to receive Royal Assent this summer.

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