The Department for Work and Pensions confirmed last week that the European Commission has allowed auto-enrolment into these schemes from 2012, in line with reforms set out in the Pensions Bill, but not before.
In last week’s issue of Money Marketing, Standard Life head of pensions policy John Lawson urged the Government to allow auto-enrolment on a voluntary basis as soon as this year to get round the potentially damaging new unfair commercial practices directive and boost employees’ pension pots.
Tisa says the Government could easily define GPPs in a way consistent with the agreement achieved with the European Commission by making a small amendment in the current Pensions Bill. This would allow employers operating workplace pension schemes to auto-enrol staff, leaving them free to opt out if they choose, without the DWP having to return to Brussels.
Both Lawson and Tisa have stressed that the extra four years’ savings could significantly improve an employee’s retirement income. Tisa says that the difference could be as much as 25 per cent.
Director general Tony Vine-Lott says: “Nearly five million people are not taking advantage of working for a company that offers a workplace pension. This move could play a pivotal role in getting more people benefiting from saving now rather than having to wait until 2012.”
Director of Portfolio & Retirement Planning Malcolm Small says: “The Government’s success with the European Commission means that there is now no good reason to delay the benefits of auto-enrolment, one of their key pension reforms, until 2012.”