The new pensions reform minister has told Personnel Today that the government will simplify the pensions system to ease the burden on employers.
Mike O’Brien, appointed by prime minister Gordon Brown last month, also stressed that the proposed ‘personal account’ pensions scheme would complement existing provision and would not compete with organisations’ existing schemes.
Under the proposals, employers will be required to auto-enrol all employees into either an existing pension or a personal account, which will have a minimum employer contribution of 3% of an employee’s wage.
O’Brien told Personnel Today that the target group for personal accounts was low-to-moderate earners who did not have access to a company scheme.
“It is important that quality workplace pension schemes are allowed to thrive,” he said. “Many employers offer good-quality pension schemes and we want to support them.
“We are examining pensions regulation with the aim of making the private pensions regulatory framework simpler, and to ease the burden upon employers.”
Pensions expert Rachel Vahey, head of pensions development at financial services firm Aegon Scottish Equitable, said it was crucial that the government targeted the right people.
“Personal accounts should be used for people who don’t have access to workplace pension schemes. That should be clear,” she said.
“Personal accounts will be used to close the gap for those who cannot get a work pension. People should still be encouraged to go for a workplace pension where they can.”
Joanne Segars, chief executive of the National Association of Pension Funds, said O’Brien would be watched closely by employers.