Shortly before the dissolution of Parliament, the Government laid amending regulations introducing some "technical changes" to the regime for automatic enrolment of workers into suitable workplace pension schemes. This included a long awaited relaxation for workers who have opted out of any future pension saving for tax purposes.
These changes to the automatic enrolment regulations - which came into force on 1 April - are:
- Employers are now not required to automatically enrol workers
who:
- Are under notice to terminate employment.
- Have opted out of the pension scheme in the previous 12 months. This avoids the situation where a member has opted out and then – by earnings increasing over the income tax threshold or turning age 22 – becomes an eligible jobholder who is then subject to automatic enrolment. The worker would be subject to re-enrolment in three years time.
- Have opted for a tax protected status for existing pension savings. One of the consequences of these protections is that no future pension saving is allowed. HMRC have as a concession agreed that workers who leave the scheme during the opt-out window would not lose their protected status. However, that ran the risk of a worker losing their protection through inadvertence in not opting out straight away.
- Changes to the information requirements to facilitate one individualised communication, which suits all circumstances. The Pensions Regulator has updated its guidance and template letters to workers to reflect this simplification.
- A new quality requirement test for defined benefit schemes was
introduced by the Pensions Act. This was needed as one of the
current tests – that the scheme was contracted-out of the
state second pension – could no longer operate from 6 April
2016 as contracting-out was being abolished and the existing
alternative test was considered unnecessarily complex. The new test
requires certification that the cost of providing accruals is at
least equal to a prescribed percentage of earnings. The regulations
set out the details and percentages and the intention is that this
certification will become part of the regular triennial
valuation
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
