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Auto-enrolment’s legislative and regulatory stage is ending and it is vital that no more significant changes are made

We are slowly edging our way towards October 1, 2012, the official start date of automatic enrolment. This is when the first batch of employers has to start putting their eligible workers into a pension plan and for the first time pay a minimum statutory pension contribution.

Although we have most of the details, there are still a few outstanding issues which have the potential to disrupt the workplace pension reform timetable.

We originally expected royal assent of the Pensions Bill 2011 in July but it is now delayed at least until midOctober. This is an important piece of the pension reform jigsaw as it not only includes changes to state pension ages but also sets out the amendments to automatic enrolment recommended by last summer’s independent review, entitled, Making Automatic Enrolment Work.

The delay is unfortunate and is largely due to a combination of a heavy legislative workload and opposition to bringing forward equalisation of state pensions (initially at age 65) two years earlier than planned to 2018.

In response to the furore, the Government announced it would introduce transitional arrangements for the women most affected. Hopefully, this concession will be enough to get the bill safely through the final stages of the Parliamentary process.

Equally important as the Pensions Bill is the secondary legislation or the amending regulations. These set out the practical implications of the bill – basically, what employers have to do to comply with the regulations and what the pension industry needs to know to help employers comply.

In normal circumstances, secondary legislation is only published following royal assent of primary legislation; in this case the Pensions Act 2011. However, as the pension industry was calling for more certainty, given the diminishing time to get ready for October 2012, the Government decided to issue these early. As consultation periods last for three months, this is a welcome move. However, we still do not expect to get the final regulations until the end of this year and perhaps not until early 2012 and that is assuming that everything remains on track.

This is a worrying thought as the regulations cover a number of important changes, including revised staging dates due to the moratorium on regulation for small employers until April 2014, provisions for self-certifying minimum legislative contributions for definedcontribution schemes and numerous technical changes. All these could be changed by the time the regulations are finalised.

As part of the legislative process, the work and pensions select committee chose to carry out an inquiry into automatic enrolment and Nest. Many of the issues covered had already been addressed by last year’s independent review, so the timing of this looked a little odd and unhelpful.

Although positioned as an “education piece”, it still has the potential to disrupt the pension reform timeline – if it decides to make any recommendations.

Since the pension reform white paper was published in 2006, we have had various consultations, pensions acts, regulations and policy changes. We are coming to the end of this legislative and regulatory stage and are now working towards October 2012, So it is vitally important that any outstanding details are clarified quickly and that there are no significant changes to regulations or further policy amendments to allow automatic enrolment to bed in. Any more change so late in the day could be counterproductive.

Kate Smith is regulatory strategy manager at Aegon



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