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NAPF presses for rethink on auto-enrolment

The National Association of Pension Funds has criticised proposed rules for auto-enrolment as “inflexible, bureaucratic and costly” and is calling for radical changes.

In its response to the Department for Work and Pensions’ consultation, the NAPF says the proposed rules would lead to high costs for employers and widespread levelling down.

It estimates the proposals for handling opt-outs would cost big employers hundreds of thousands of pounds in the first year of auto-enrolment, as firms have to change payroll processes to comply with the rules.

It believes many employers will opt for personal accounts, reducing their contributions to the minimum 3 per cent.

Director of policy Nigel Peaple says: “The DWP’s proposed processes and timescales, set out in the draft regulations, are too rigid. These problems are largely avoidable if the DWP radically alters its approach and allows employers much more flexibility. The Government must act urgently to take account of pension schemes concerns.”

The NAPF has suggested modifications to the proposed rules and deadlines, including an extension of the deadline to complete auto-enrolment from 44 days to three months.

It is also calling for an extension of the periods employers are allowed to provide information to employees, greater flexibility on the handling of opt-out forms and for the ban on employers providing opt-out forms to employees to be axed.

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