The Department for Work and Pensions has rejected calls for a "compliance window" for age discrimination regulations for pension schemes.
Final regulations on how the new age discrimination rules will affect pension schemes were published on 10 November, leaving employers and scheme trustees just three weeks to meet the 1 December deadline.
As a result, although the Confederation of British Industry (CBI) welcomed the amendments to the regulations, it urged the government to give employers more time to implement the rules.
As it pointed out the government itself, under the Cabinet Office’s better regulation guidelines, suggests companies should have a minimum of 12 weeks to comply with new regulations.
However on Friday, in a letter from David Bateman, head of EU and international pension policy at the DWP, the government has confirmed it will not introduce any further delays in implementing the regulations.
The DWP says following the announcement about the possibility of a “compliance window” for the implementation of the new age discrimination rules, it says it has “explored this option thoroughly and, unfortunately, have had to conclude that we cannot introduce such a provision”.
Bateman says: “Such a provision would, in effect, be allowing unjustifiable discriminatory practice to continue for a period of time after which, due to our European obligations, we are required to prevent it.”
He says introducing a “compliance window” would be “outside the powers” of the UK, as it would be trying to “circumvent” the EU Directive which requires all EU countries to have implemented the rules by 2 December.
In his letter Bateman adds: “I appreciate this is not the news many of you would have wanted but we believe the revised regulations substantially improve the range of national level justifications and cover the common rules and practices operated by occupational pension schemes.”
But Aegon Scottish Equitable says with less than two weeks to go before the 1 December implementation date and with revised Department of Trade and Industry (DTI) guidance still to be published, the company believes employers and trustees may struggle to make the necessary changes in time.
It argues employers need final guidance to clarify whether they have to allow flexible retirement, while it says it would like to see further guidance on what is needed to allow age-related contributions.
As it points out while the amendments to the regulations exempt tiered contributions where the aim is to equalise or ‘make more nearly equal’ pension benefits for people of different ages, it claims they aren’t specific enough on what it takes to meet this requirement.
In addition Aegon Scottish Equitable says it is concerned employers, trustees and advisers of smaller defined contribution schemes may find it hard to understand the final regulations and identify the changes they need to make to ensure their scheme is compliant.
Alison Nelson, head of group marketing, says: “The clock is ticking and there’s a big risk of employers and trustees being caught out by the legislation. While we sympathise with the DWP’s position in having to stick to the original implementation date, a three week period between final regulations and the effective date is really asking a lot.”
Andrew Tully, marketing technical manager at Standard Life, says despite the “incredibly late” issue of final regulations covering these changes, the DWP are “unwilling to even slightly bend the EU imposed timescales”.
And he warns: “This means employers and trustees need to take immediate action to ensure their pension scheme meets the new requirements, otherwise they face the possibility of court action and increased costs during the period their scheme is not compliant.”
Meanwhile Sumantra Prasad, senior policy adviser at the CBI, says although they’re pretty happy with the substance of the regulations, he says the organisation is “quite unhappy” about the decision not to introduce a “compliance window”.
He adds: “Considering the length of time it has taken to sort out the regulation, this leaves schemes just two weeks to comply, and particularly for large complicated schemes, this leads to more pressure being put on pension schemes when they least need it.”
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
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