A leading law firm has warned draft government regulations aimed at providing employees with greater control over their work scheme pensions will lead to a lengthy consultation process.
Wedlake Bell says the new regulations, announced last week by Pensions Minister, Stephen Timms, will add to the burden of red tape already being suffered by an industry preparing itself for simplification. The law firm also believes government efforts have been fairly restrained in their quest to provide enhanced protection for scheme members.
It says consultation will not be required for minor changes to contribution rates, while employee agreement will also not required. Futhermore such reforms will not apply to those small companies with less than 50 workers.
But Jane Wolstenholme, partner at Wedlake Bell’s pension team, warns: “Factoring sufficient consultation time into employers' plans could slow down the process for improving the company's pension position.”
She says employers will need to configure a delay period of at least two months for consultation into its plans, while those employers not affiliated with recognised trade unions or representatives, could face an additional delay while they first face an employee representative nomination process.
The new regulations on pension requirements are to be phased in over time targeting employers with more than 150 employees from A-Day, then employers with more than 100 employees the following year and finally employers with more than 50 employees in April 2008.
Wolstenholme argues the requirement to consult on pensions should be based on the number of active employees in or eligible to join the scheme, as opposed to the total amount of workers in the company.
“While applying the same number thresholds as for the general Information and Consultation rules may seem like keeping it simple, it could actually create inconsistencies as far as pensions are concerned," she adds.
The consultation period runs till 26 August .
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