UK roundup: Department for Work and Pensions, The Pensions Regulator

The UK government has responded to a consultation on making technical changes to the rules governing auto-enrolment.

The Department for Work & Pensions (DWP) was consulting on whether to exempt certain individuals from auto-enrolment after pressure from the industry over technical difficulties.

In its response, the government has concluded workers, where auto-enrolment would breach their protected tax status, may be excluded, but only if highlighted by the employee beforehand.

The department said it would construct viable options to exclude those who had given notice of retirement, but said it needed to consider further the practical implications of excluding those leaving employment.

It ruled out, despite industry lobbying, exclusion for those with serious ill health, those working for a UK employer but living abroad and new starters, temporary or casual staff.

It also concluded it inappropriate to exclude employees on the basis on employer size or sector.

In another issue, the DWP has gone against general industry consultation in removing the protected status of defined benefit (DB) schemes, which belong to former public industries but have since been privatised.

As contracting out ends in the wake of the new state pension structure, the option to allow DB schemes to change the level of benefits for members, to manage the extra cost burden associated with the end of contracting out, is available to all schemes, except these former public schemes.

Despite the National Association of Pension Funds’ call for all funds and members to be treated equally, the government said it must stand by the promises made to former state workers at the time of privatisation.

Finally, in its monthly update, The Pensions Regulator, has announced that almost 2.9m people had undergone auto-enrolment by the end of January 2014.

They join the 7.8m people who were already members by the time their employer staged.

However, the watchdog admitted that more than 3.6m employees had been left out of the flagship pension project since it began in 2012.

The latest estimates have employee opt-out levels at around 10%.