Product providers have welcomed the Government’s commitment to tackling the problem of exempting group personal pension schemes from personal accounts in 2012.
Standard Life, Scottish Widows, Aegon and Legal & General are among providers that say they are reassured by the Department for Work and Pensions’ response to the White Paper consultation which states that the Government will support the continuation of high-quality existing pension arrangements.
Legal & General pensions policy director Adrian Boulding says he is “hugely encouraged” by the Government’s commitment to solving the problems of how to exempt existing GPP and other contract-based schemes from personal accounts in a manner which is compliant with the EU distance marketing directive.
The DWP says it has received two suggestions as to how to overcome the issues around existing contract-based schemes. The first suggestion is the Government should amend legislation to re-classify workplace personal pension arrangements as occupational pensions to enable employers to use auto-enrolment. The second is to pass an overriding domestic law that permits any employer to auto-enrol employees into a personal pension arrangement as part of general terms of employment, removing the need to obtain written consent from individual employees.
Standard Life head of pensions policy John Lawson says: “The second solution is not compliant with the DMD so the first solution should be implemented. We have got to have auto-enrolment for GPPs and other contract-based schemes and they have got to enrol new workers from 2009 onwards if they are to survive.”