The Department for Work and Pensions has published a simplification plan, as part of the government's ‘Better Regulation' agenda, but has failed to include any further details of its rolling deregulatory review of pensions.
In the 58-page document, which the DWP says includes “proposals to reduce administrative burdens, and our other simplification proposals”, includes a section on the deregulatory review for personal pensions announced earlier this year along with proposals to reduce the overall administrative burden the DWP places on businesses, charities and the voluntary sector.
The plan reveals in May 2005, after taking part in the Administrative Burdens Measurement Exercise (ABME), it was agreed the net cost of the administrative and regulatory burden the DWP was placing on businesses was around £471m a year, and as a result set itself a target to reduce this by 25% by 2010.
In the foreword to the report, James Purnell, Minister for Pensions Reform, says the plan identifies how the DWP plans to deliver nearly half of the 25% target, while also setting out a number of reviews which the DWP will “take forward to meet or exceed the overall target”.
He says it also “identifies a number of large-scale activities in key areas of policy, including private pensions regulation, Statutory Sick Pay, and benefit simplification, and places the DWP’s better regulation activity in a broader context”.
However, while the report outlines the reasoning behind the plan and the regulatory reviews it plans to take on stakeholder pensions, personal pensions, statutory maternity pay, statutory sick pay and protected rights, the plan is lacking in exactly what these reviews entail, with many of them not given a specific date for completion, merelystating the reviews will be completed by the end of 2007.
The section on the deregulatory review of personal pensions also consists of highlighting the DWP’s decision to scrap new regulations on the disclosure of information to members of occupational pensions, which should have been introduced on 1 October.
The report points out since announcing the proposed review, there have been two concerns raised by the industry: one is that the review will only be worthwhile if measures which have a significant impact are the result, which led to concerns the government may not be willing to introduce measures which may attract opposition.
Secondly, the report notes the industry also wants to ensure members’ benefits are protected, raising concerns that the review may recommend measures which could adversely affect this.
As a result, the DWP has announced “although it will be difficult, the government’s view is that it is important the review aims to build a consensus on the issues of concern to schemes, and the appropriate solutions”.
And it points out as occupational pension schemes face significant challenges, the DWP says “the review will seek to establish agreement among key stakeholders about those challenges, the options available to schemes to cope with them, and the recommendations which should be made”.
And the plan reveals to help this process the DWP has set up an advisory group made up of representatives from bodies such as the Association of British Insurers (ABI) the Trades Union Congress (TUC) and the National Association of Pension Funds (NAPF), which has begun to develop proposals for consideration.
But the plan does not go into any details about possible areas of review, merely reiterating the proposals included in last month’s Pension Bill, to abolish contracting-out for defined contribution (DC) schemes, allow schemes to convert guaranteed minimum pension (GMP) rights into normal rights and to simplify the internal dispute resolution procedure for schemes.
In addition, the plan says while the review will make its first report to ministers in the “first half of 2007”, there is the suggestion this will not include any firm proposals, as the report states “having undertaken analysis and consulted upon emerging conclusions, the review will have an important role to play in generating debate on the key issues to be tackled and the best approach to use.”
Meanwhile, the Institute of Directors says although it welcomes the publication of the simplification plans by government departments it warns it must lead to a step change in the delivery of tangible results to business.
Miles Templeman, director general of the Institute of Directors, adds: “There seems to be a real poverty of ambition; and the Institute is also concerned some of these projects are not set to deliver until 2009/10 and will be working closely with government departments to ensure the programme is delivered with greater urgency.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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