The European Commission looks set to agree that employees can be auto-enrolled into group personal pensions when personal accounts are introduced in 2012.
Money Marketing understands that the EC has already informally agreed that this can go ahead but that written confirmation is yet to be received by the Department for Work and Pensions.
When personal accounts are introduced, employers who run GPPs as good or better than the schemes will be exempt and will auto-enrol all of their staff into the employer’s GPP.
But there has been growing concern from the pensions industry that EU law would prohibit the auto-enrolment into contract-based schemes such as GPPs.
It is understood that the EC has acknowledged that for the purposes of UK pensions policy, auto-enrolment of employees into GPPs would be allowed as it is outside the scope of the Distance Marketing Directive.
The DWP is believed to want to amend the Pensions Bill before it reaches the House of Lords later this month to include legislation enabling auto-enrolment into GPPs.
A DWP spokesman says: “We are seeking confirmation from the EC that auto enrolment into personal pensions is compatible with European consumer protection legislation. We have not had official notification.”
Hargreaves Lansdown has been busy this week with both transport company Stagecoach and home improvements retailer Kingfisher signing up to use its group Sipp.
The Stagecoach deal is particularly significant because it is the first major employer to offer a group Sipp as the default pension scheme for all new employees.
The existing 10,500 Stagecoach staff who are currently in the firm’s stakeholder scheme or without provision will also be offered the option to move into the group Sipp.
It will continue to run both its closed and open defined-benefit pension schemes.
Kingfisher¹s new scheme is initially being set up to accommodate maturing shares and additional voluntary contributions.
The scheme will run alongside Kingfisher¹s existing closed defined benefits scheme and its open defined contribution scheme run by Standard Life.
Kingfisher employees already have access to the Hargreaves Lansdown retirement annuity service for their existing maturing defined contribution arrangements.
The group Sipp is being rolled out across the Kingfisher executive and management population, starting with maturing share scheme benefits for executives in the spring 2008, followed by wider AVC top-ups this summer.
Hargreaves Lansdown head of pensions research Tom McPhail says: “This is a great endorsement from a leading British employer; it also demonstrates the extent to which group Sipps are now a mainstream pension solution. Demand
for share save solutions is becoming a key driver of group Sipp business.”