Employers will be able to ‘self-certify’ that their pension scheme meets expected standards when new minimum levels of saving come in to force from 2012.
The government has announced new measures to be included in the Pensions Bill designed to ease the administrative and financial burdens on employers running pension schemes.
The Bill requires that each member of a qualifying money purchase scheme – such as the proposed Personal Accounts scheme – receives contributions of at least 8% of earnings, of which 3% must be paid by the employer.
Pensions minister Rosie Winterton said: “The amendments will mean that employers who are confident their workers will receive the new minimum level over the year can certify to this extent, as opposed to doing so for each individual over each pay period.”
Following necessary checks, employers that are confident their workers are on course to receive the new minimum level of pension saving will be able to certify that their arrangements meet this standard. Once certified, employers will not be required to make retrospective payments if contributions unexpectedly fall short, unless the detriment to an individual exceeds certain minimum levels.
Helen Dowsey, principal at Aon Consulting, said: “This is an important clarification that will enable employers to plan more easily and significantly reduce the administrative burden that may have been required.”