UK firms warned on consultation
Employers in the UK could be fined by the Pensions Regulator if they fail to stick to the new 60-day consultation period regarding proposals for any major changes to their pension funds.
Pensions reform minister Stephen Timms recently announced that employers would no longer be able to make significant changes to their schemes without first consulting scheme members.
The regulations, introduced under the 2004 Pensions Act, require employers to consult current and prospective scheme members for “at least” 60 days before any changes can be implemented.
“These regulations will mean that employees will now have a voice about any major changes to their pension scheme,” said Timms. “Members need to fully understand their pension scheme, and the effect that changes will have on it and their future positions.”
Employers with more than 150 employees will need to comply from 6 April 2006, those with more than 100 employees from 6 April 2007 and those with more than 50 employees from 6 April 2008.
The Pensions Regulator says scheme members can report employers to it if they feel the consultation process was not properly conducted.
Employers failing to comply with the rules will be issued with an investigation and improvement notice. The Regulator could fine an employer that failed to co-operate.
The Confederation of British Industry (CBI) has endorsed the need for consultation between employers and employees. But CBI deputy director-general John Cridland stated: “Government must ensure the new requirements do not add to the regulatory burden by mirroring existing information and consultation processes.”
A spokesperson for the National Association of Pension Funds (NAPF) told IPE that these new development were merely “putting into regulation what has been normal practice” among its members.
He added that while employers could theoretically press ahead with changes even where employees disagreed, it would go against the notion of good industrial relations.
“It is better to take your employees along with you than impose it big_changes on them,” he said.