New measures for employer pension schemes announced

New measures designed to ease “the administrative and financial burdens” on employers running pension schemes have been announced by Pensions Minister, Rosie Winterton.

Employers will now be able to 'self certify' that their pension scheme meets the quality standard based on the expected value of pension contributions to be made over the course of each coming year.

The Pensions Bill states the quality standard for a money purchase scheme is that members receive contributions of 8% of qualifying earnings, of which 3% are made from the employer.

Winterton also confirmed that the rates for the General Levy and the PPF Administration Levy for 2009-2010 would be frozen at this year's level to avoid putting additional cost pressures on pension schemes at the current time:

"The Government understands the pressures that employers are under at the present time and we are committed to helping them in whatever way we can. These reforms are based on a broad consensus among stakeholders. For our reforms to work it is vital that wherever we can we make them as simple and straightforward for employers to implement. This will be to their benefit and their employees.

"The amendments will mean that employers who are confident their workers will receive the new minimum level over the year can certify to this extent as opposed to doing so for each individual over each pay period.

"By freezing the General and Administration levies at this year's level I believe we are meeting the commitment we made last year to provide levy cost stability for pension schemes."

DWP Minister, Lord McKenzie of Luton says:

"Over two million workers currently receive contributions at or above the minimum laid out in the current Bill. We want this to continue. The administration of the quality test is important, and we certainly do not want the new arrangements to undermine existing good provision. The introduction of certification is specifically intended to reduce this risk."

The new minimum level of pension saving is due to come in to force from 2012.