The Pensions Regulator

Pensions reform

Government pensions reform aims to make sure that more people have adequate and well-protected pension savings.

Central to the reform is the Pensions Act 2008.

The Act introduces new duties on employers and gives the Pensions Regulator a new objective to maximise compliance with the duties, and ensure safeguards that protect employees are adhered to.

Our Q&As: Pensions reform section tells you more. 

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The new employer duties
Our approach to regulation
Our approach to communicating the new duties
Key facts:  Royal Assent - Workplace pension reform

The new employer duties

In summary, employers will be required to:

• enrol employees automatically into a qualifying workplace pension scheme;
• register with the regulator how they have fulfilled the enrolment duty;
• allow a genuine opt-out procedure for jobholders and process any resulting refund of contributions correctly; and
• make a minimum contribution of 3% of pay to an employee's pension scheme.

We'll be responsible for making sure employers comply with these duties and will be educating and enabling them to do so.

Our approach to regulation

To carry out our new objective we're designing an 'employer compliance regime' based on the following steps.

Engage stakeholders
This will involve raising awareness of the new duties amongst the intermediaries employers rely on for help and advice (eg payroll providers, accountants, financial advisers and solicitors).

We'll also inform pension providers of the new requirement.

Increase employer understanding
We will provide targeted communications and education to employers to inform them of their new statutory duties and the consequences of non-compliance. 

This will specifically concentrate on their duty to automatically enrol their employees and register with the regulator.

Automatic enrolment and registration
Auto-enrolment is a key duty under the new regime and we'll monitor whether or not employers are complying with the duty through registration.

Enable compliance
We'll identify potential instances of non-compliance and intervene where necessary to help employers get back on track.
 
Enforcement
Where employers remain non-compliant despite our earlier attempts to engage with them, we may use the powers granted to us in the Act.

This may include financial penalties and, in the worst cases of non-compliance, criminal prosecution.

Our approach to communicating the new duties

We'll meet widely with trade bodies and intermediaries before the new duties start. This is so that any advisers or professionals an employer is likely to contact for information will have been briefed already. 

We'll follow this with a programme of direct contact with employers aimed at helping them to comply with their new responsibilities.

This will be tailored to an employer's:

• size;
• experience of pension provision; and
• existing relationship with government bodies.

We'll use a variety of communication channels, but the main one will be our website.

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Key facts: Royal Assent - Workplace pension reform

• The Pensions Act 2007 reformed State pensions and introduced arrangements to increase the State pension age. The Pensions Act 2008 reforms workplace pension provision. 
• The aim of these reforms is to make saving for retirement the norm. There are currently around 7 million people in the UK who are not saving enough to generate the pension income they are likely to want, or expect, in retirement
• The workplace pension reforms are due to take effect from 2012 and will be introduced gradually to facilitate a smooth take-on of employers by the Pensions Regulator and pension schemes. 
• The workplace pension reforms mean that all employers must offer a qualifying workplace pension scheme to their workers and that all eligible workers must be automatically enrolled into this chosen scheme.
• A minimum employer contribution of 3% on a band of earnings will be required, but can be more than this. The total minimum contribution for eligible workers should equal 8% of that band of earnings. This is made up of employer contributions, worker contributions and tax relief.
• Auto-enrolment is designed to make it easy for individuals to participate in pension saving, helping to overcome the inertia which prevents many people from saving currently.  However, individuals will be able to opt out.
• The personal accounts scheme is being created to provide a low-cost, independent, workplace pension scheme that any employer can use. It aims to provide access to workplace pension saving to millions of people – typically those on low to middle incomes.
• Employers will be able to choose to use the personal accounts scheme or another qualifying workplace pension.
• 3 parties will work together to implement the new reforms – the Department for Work and Pensions (DWP), the Pensions Regulator (TPR), and the Personal Accounts Delivery Authority (PADA).
• DWP is responsible for co-ordinating activity for the reform programme, including agreeing policy with Ministers and overseeing delivery.
• The Pensions Regulator is the UK regulator of work-based pension schemes, and is an existing non-departmental public body.
• The role of the Pensions Regulator in these reforms is to maximise compliance with the employer duties set out in the Act, and ensure certain safeguards protecting employees are adhered to. It will provide information to employers on how to fulfil their duties and guidance on good standards of pension scheme administration.
• The Personal Accounts Delivery Authority is a new non-departmental public body specifically established under the Pensions Act 2007 to help implement the reforms.
• PADA will be responsible for designing and introducing the infrastructure for the new personal accounts pension scheme.