Bee-Mail - 8 December 2011

Pensions Gap Year

Well, now some of the dust’s settled following last week’s changes to the roll-out of the new pension reforms I thought I’d add my tuppence-worth.

To be honest, when I wrote the words to our jargon-free explanatory video on the pension reforms I was mindful of the fact that pensions stuff changes all the time, so I was careful not to be specific with anything. The age 22 minimum, for instance, was described in the video as ‘older than a certain younger age’ and State Pension Age was referred to similarly as ‘younger than a certain older age’. The video, I thought, was thus timeless.

Unfortunately I did say that the Staging Dates that employers had been allocated were fixed so you can imagine I wasn’t massively impressed when ministers announced that the Staging Dates for the smallest firms affected by auto-enrolment were being put back by a year.

I should have known better, I guess, as this is now the second time it has happened!

Anyway when I first read the rumours in the weekend papers that the auto-enrolment timetable was going to change I realised straight away that my timeless video would need to be changed. Like I say; not impressed!

Rumours, though, seem still to be running all around this tricky aspect of the trickiest pension system you could ever imagine. What do we know for sure?

Well, to start with we know that the larger employers who employ 3,000 or more employees will see no change to their previously announced Staging Dates. So between October 2012 and July 2013 the Staging Dates will be just as they were.

We also know that employers with fewer than 50 employees (the so-called micro-employers) will have their Staging Dates delayed until after May 2015 (the next Parliamentary session). Now, the first employers with fewer than 50 employees were previously due to hit their Staging Dates in August 2014 so I’m still a bit confused about whether the delay is a year as I’ve read in some reports or the 10 (or 11) months between August and May/June. When I first read about this it was said to be a delay of a year, so maybe that’s the way it’s going to be done.

What we also know for sure about all this is that the Government people have said they will publish a new (and final) timetable of the revised Staging Dates in January 2012 so I suppose the only way we’ll be really, really sure about any of this is to wait until we see it in black and white.

My first instincts, though, when I heard it was a delay of a year for the micro-employers was to imagine it as a hiatus, sort of a gap-year if you like. You know, with the last batch of firms with between 89 and 50 employees going live in July 2014 as previously announced and then we would all get a year off before the first sub-50 firms got the go-ahead. But that’s obviously not what’s going to happen. It looks like all of the firms with fewer than 3,000 employees, but more than 49 employees will all shuffle around a bit Staging-Date-wise so there’s no gap in the proceedings. That too will become apparent I suppose when we see the final list next January.

There’s a bit of a question mark around the phasing of the minimum contributions too and that will also, I hope, be settled in January. So we’ve got a lot to look forward to in the new year.

Lucky us.

Changes like this, while they are the bread and butter of those of us in the pensions industry and keep us interested and make us feel involved and important, really do I think give ordinary people outside of our industry the impression that our pensions rules in the UK are all over the place. What’s right this week may not be right next week, or even tomorrow. The one constant we have in pensions in the UK is that the system constantly changes.

I hope I’m not the only one who thinks that a long-term savings market like pensions can only be damaged by constant short-term change. Or maybe I just don’t get it...