Personal Accounts

Trailed by the Government as the most historic pension reform since the introduction of old age pensions in 1908, 2012 will see all employers required to auto-enrol all their employees aged between 22 and State Pension Age into Personal Accounts with an employer contribution of 3% of earnings unless they auto-enrol employees in another pension scheme which meets specified and detailed minimum quality requirements.

This reform will affect all employers in the UK. The prospect of significantly increased pension costs and an increased administration burden will force employers to fundamentally review their pension provision for current and future employees. Even employers who currently auto-enrol all employees in a pension scheme which meets the minimum quality requirements may well need to make significant changes to administration, HR processes and employee communication. Employers will need to make fundamental decisions about their future pension provision in light of their budget and HR and business objectives, covering questions such as:

  • do my existing pension arrangements exempt me from Personal Accounts?
  • should I amend the existing pension arrangements to exempt me?
  • should I offer a new pension arrangement to exempt me?
  • should I enrol some or all of my employees in Personal Accounts?
  • what are the cost implications of the various options?
  • are these costs affordable and do they have knock on effects on the affordability of the pensions we provide for current employees?
  • how will I implement the required changes?
  • how will I communicate the changes to employees?

Next steps:
Lane Clark & Peacock LLP has a wealth of employee benefit design expertise and has helped hundreds of clients implement a wide-range of innovative "A-day" solutions. For more information as to how we can help employers with the challenges they face as 2012 approaches, please contact the partner who normally advises you, or one of our Personal Accounts specialists, Chris Clough, Tony Bacon or Mark Folwell on +44 (0)20 7439 2266.

Useful links:
http://www.dwp.gov.uk/pensionsreform/whitepaper.asp
http://www.dwp.gov.uk/pensionsreform/new_way.asp