DWP auto-enrolment regs "bureaucratic"

Related images

  • DWP auto-enrolment regs "bureaucratic"

UK - Draft regulations on the practical arrangements for auto-enrolment into pension schemes from 2012 are "overly bureaucratic", according to the pensions industry. 

The department for work and pensions (DWP) last week issued a consultation on the proposed rules which there should be a scheme joining window of 14 days - with a concurrent two-week period for information provision for personal accounts - while workplace personal pensions (WPPs) should have a seven-day information period before allowing a week for the member to consider joining the scheme.

However, Lane Clark & Peacock (LCP) claimed this could create an "unlevel playing field" between occupational and personal pension schemes, because personal pensions only have seven days to get the information to the employee and then seven to auto-enrol.

The actuarial consultants claimed: "It is very easy to imagine practical problems. Many of the targeted employers will be unable to administer this efficiently".

The draft regulations also suggest there shoudl be a 30-day opt-out period for employees, and forms will only be available from the pension scheme to avoid employers placing pressure on members to leave the scheme, although an employee must be an active member of the scheme before they can choose to opt out.

LCP questioned whether the 30-day opt-out is reasonable, as it argued members should be allowed to leave after six months if investments are performing badly, and warned: "It appears that employees already in membership in 2012 will be effectively locked in until the next automatic re-enrolment. Is this really an intended consequence?"

Meanwhile, Gary Tansley, consultant at HamishWilson, said: "We see little reason for forcing new recruits into active membership of a scheme, even if it's the personal accounts scheme, only for them to opt-out a few days later.

"It will place an unnecessary burden on employers to require them to go through the hoop of automatic enrolment - and possibly deducting contributions only for them to be refunded a few weeks down the line - before the recruit has the chance to opt-out," he added.

Tony Bacon, of LCP, said: "This is only the start of the long process of sorting out the many uncertainties about how the new system will operate. The pensions industry is still waiting to see other critical areas such as staging, phasing, qualifying scheme conditions and certification in later consultation."

The consultation closes to responses on 3 June 2009.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2517

    Asset class: Fixed income.
    Asset region: Global.
    Size: $70m.
    Closing date: 2019-03-20.

  • QN-2519

    Asset class: Fund wrapper.
    Asset region: Global.
    Size: EUR 80m.
    Closing date: 2019-03-29.

Begin Your Search Here