The National Pension Savings Scheme (NPSS) White Paper was published just before last Christmas, with little fanfare. There has been surprisingly little reaction to a document that represents a massive sea change to corporate pensions provision in the UK.
It's easy to suspect that the main reason for this is the 'ostrich' approach. The pensions industry is always nervous about change, and has therefore buried its collective head in the sand, rather than provide useful comment to HR professionals.
This approach is, to say the least, unfortunate, as NPSS will impact on every UK employer in some way. Indeed, for many, it will represent a significant rise in costs, not to mention an extra administrative burden for the already hard-pressed HR department.
Employers fall into two camps: those who already provide an employer contribution to assist their staff, and those that don't.
Employers with a company-supported pension scheme may be feeling pretty smug at this point. You already offer a good-quality defined contribution (DC) scheme, and since your advisers have made no mention of the legislation, there is nothing to worry about, right? Wrong.
While the White Paper states that the NPSS is "not designed to compete with existing company pension schemes", the reality will be different. By its mere existence, NPSS will directly compete with virtually all existing DC schemes. For starters, even where an employer already offers a good quality DC scheme, it may not be sufficient to obtain 'exemption' from the NPSS requirements.
The White Paper sets out the likely exemption criteria (for occupational trust-based schemes) as:
At least match the NPSS's contribution structure
Offer auto-enrolment every three years and for all new joiners
Offer a default fund for investment.
It is highly likely that only a small percentage of existing DC schemes will currently meet all three of the above criteria.
Easily the most significant concern from thi