The Pensions Regulator publishes response to scheme list consultation
06 March 2015
The Pensions Regulator has issued its response to consultation feedback received on proposals to publish a list of pension schemes available to all small employers for automatic enrolment. The regulator will not be pursuing its proposal for a list at this time.
The regulator consulted in November 2014 on proposals to publish a list in order to address the risk of non-compliance amongst employers struggling to find a scheme, particularly those employers that do not intend to seek an adviser to help them. Research by the regulator suggests one in five (290,000) employers in this category will not seek advice when choosing a pension scheme, while one in ten (130,000) do not know how to select a scheme, or think it will be difficult.
The majority of consultation responses were supportive, but the feedback also presented a number of significant challenges relating to setting objective entry and exit criteria that could be applied fairly and evenly to schemes. Several respondents pointed out the difficulty in articulating criteria for universal acceptance of all employers, regardless of size. There were concerns that some suitable schemes, operating reasonable terms and conditions, could end up being excluded.
These concerns were expressed against a backdrop of proposed new legislation setting minimum governance standards for defined contribution schemes, and other governance initiatives being in their early stages of implementation, such as the master trust assurance framework and the requirement for independent governance committees for contract based schemes.
Without commonly agreed criteria, it is difficult for the regulator to manage a list in an objective and transparent way, including providing appropriate levels of scrutiny, managing entry and exit from the list. At present, this could only be achieved with substantial upfront and ongoing assessment of schemes intending to enter and remain on the list, which could be disproportionately onerous for those schemes and the regulator.
In light of these challenges, the regulator will not be pursuing its proposal for a list at this time. It will continue to keep this position under review. The regulator will work with the pensions market to look for alternative ways to help small and micro employers to find a suitable scheme, and will strengthen its existing guidance to employers in this area.
To view the response, go to helping small and micro employers identify a pension scheme for automatic enrolment.
Executive director for automatic enrolment Charles Counsell said:
“We are providing employers with the information they need to plan and prepare for automatic enrolment, and are currently enhancing this material to make it more suited to the needs of small and micro businesses. This work will include strengthening our guidance to help employers to find a suitable scheme.
We will continue to work with stakeholder bodies and those operating in the automatic enrolment market to increase the quality and accessibility of information about available schemes so that smaller employers can get ready on time.”