UK gov't clarifies rules for personal account trustees
UK - The trustee corporation behind the proposed UK personal accounts regime will be given a specific requirement in the legislation to make information about deductions or charges transparent to members when they are auto-enrolled in the scheme.
In a summary of responses to the joint consultation by the Department of Work and Pensions (DWP) and the Personal Accounts Delivery Authority (PADA) on the draft scheme order and rules of the new low cost national pension scheme, the government confirmed a few clarifying changes would be made to the regulations, but "our overall policy approach remains unchanged".
The consultation, which closed to submissions on 20 July 2009, focused on 10 key areas including the use and composition of member and employer panels; the duty to accept employers and members and minimum contribution levels for those workers without qualifying earnings.
Following feedback from 36 respondents, including the UK's National Association of Pension Funds (NAPF) and the Railways Pension Trustee Company, one of the issues clarified by the government was the role of the trustee corporation to provide information to members to raise awareness of the scheme.
It noted once auto-enrolment is implemented from 2012, employers will have to make an active choice about the pension scheme they will use, so "there is a clear need to create awareness of the scheme and its features so that employers can understand how it differs from other schemes open to them" but added it would also have to show that personal accounts will not be suitable for everyone.
"The government believes that the trustee corporation as the body responsible for the delivery of the scheme will be best positioned to provide this information", although the report admitted the state would be responsible for delivering "broader" messages such as the benefits of saving for retirement.
Meanwhile, all respondents to the consultation agreed that there should be a specific provision in the rules for the trustee corporation to make the method and level of deductions of charges transparent.
The government therefore confirmed it intends to "include an additional provision in the scheme order" that requires the trustee to make the information available when members join the scheme and also if there are "significant changes to the charge level or structure". It added that this is likely to be issued through e-channels - as PADA aims to make personal accounts an e-enterprise where possible - or on request by members without internet access.
Brendan Barber, general secretary of the Trades Union Congress (TUC), said: "It's good news for both employers and employees. Agreeing the Personal Account scheme order and rules is another important step of building a new durable pensions settlement."
Following the results of the consultation exercise, the government confirmed the next step is to lay a package of secondary legislation before both Houses of Parliament for approval.
Meanwhile ,the "bare bones" of the trustee corporation is expected to be in place by next year, as PADA started advertising the role of trustee chair at the end of September. (See earlier IPE article: UK employers may avoid certifying 'borderline' DC)
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