2012 reforms

The Government is in the process of reforming the UK’s pension system. Most of the changes are based on recommendations made by the Pensions Commission, which looked at ways of solving the UK’s pensions crisis, and published its final report in 2006. The Commission recommended that employees should be automatically enrolled into workplace pensions, and that a new national pensions saving scheme (now called NEST) should be set up, so that all employers have access to a good scheme.

Following from the Pensions Commission’s recommendations, the Department for Work and Pensions (DWP) published a series of Pensions Bills which became law in 2007 and 2008. The employer duty to automatically enrol employees will come into force in 2012. In 2009, the DWP published a series of regulations flowing from the 2008 Pensions Act which deal with the implementation of the 2012 regime.

In 2010, the Coalition Government undertook a review of the main features of the 2012 reforms. The "Making Auto-Enrolment Work" review, recommended a number of changes to the scope of auto-enrolment to make implementation easier for employers and schemes.  Changes to the automatic enrolment regime were made through the Pensions Act 2011and final regulations were published in February 2012.  The Pensions Regulator also has produced guidance for employers and schemes on implementing the reforms.

The NAPF is leading the way on simple, easy to understand information about automatic enrolment for employers and HR staff. In March 2012, the NAPF launched the first two leaflets in a new series New rules for pension saving made simple. Copies of the leaflets can be found on the NAPF website.

NAPF’s view

The NAPF and its members have been supportive of the 2012 reforms and share the commitment to widen access to pensions saving. The introduction of auto-enrolment, mandatory employer contributions and the low-cost National Employment Savings Trust (NEST) will make a huge difference to the retirements of millions of workers.

The changes to the scope of auto-enrolment recommended by the 2012 Review Team will also help widen pension provision, while still keeping good schemes open.  While the 2012 reforms are a step in the right direction, the UK pensions system will still face challenges and uncertainty over the coming years. It is time to look at the structure of pensions in the UK and to consider the quality of schemes in which people will be automatically enrolled. More information on the NAPF’s vision for UK pensions can be found here.