Pensions minister Steve Webb has said the Department for Work and Pensions (DWP) is considering imposing penalties on employers who do not choose auto-enrolment schemes deemed of a high enough standard.
Speaking at a TUC conference, Webb said the DWP is concerned auto-enrolment legislation does not provide minimum standards for schemes beyond contribution levels.
"I still find it amazing that, when the legislations went through in the last Parliament for auto-enrolment, there was almost no quality standard. There is a contribution rule, but into what?" Webb said.
"At the moment we do not have a problem because the largest employers can command very effective offers, but what happens when we get further down the market? How can we be certain that employers are choosing the best schemes for their members?
"We are thinking very hard about it, about what ‘good' looks like: what would a good scheme be in terms of charges, governance and scale? Having thought about what good looks like, we have to then think about how to encourage firms to choose schemes that meet a certain quality threshold.
"Is there a penalty for those who don't? Is there an incentive for those that do?"
Webb pledged to bring the quality standard forward "quite rapidly" as auto-enrolment accelerates in 2013.
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