Today’s eagerly-awaited Pickering Report [PDF] ("A simpler way to better pensions"), from the team of eight chaired by Alan Pickering, offers a carefully balanced package of proposals designed to make it easier for people to build up a pension. This depends on making it easier too for employers and commercial providers, ie simplifying the requirements for setting up and running a pension scheme in order to cut the cost of provision.

The report proposes a new consolidating Pensions Act, setting out policy objectives but avoiding detailed prescription of the means of achieving those objectives where possible. Implementation of the Act would be overseen by a "New Kind of Regulator (NKR)", a pro-active version of Opra but also with the kind of advisory and interpretative powers the former Occupational Pensions Board had. The NKR should draft a few Codes of Practice / Guidance Notes to supplement a minimal number of regulations; in general the new regulatory regime should place greater reliance on professionals exercising and backing their judgement.

A second major theme of the Report is the need to radically reduce the present plethora of types of pension and eliminate as many differences between the rules governing occupational pensions and individual pensions as possible - the catchphrase being 'a pension is a pension is a pension'. In fact, Pickering recommends there should be just three kinds of pension scheme: defined benefit, employer-sponsored money purchase, and individual pension arrangements (including top-ups to occupational pension schemes). Centralised schemes (especially for non-associated employers) should be encouraged.

The third key theme is 'more pension / less prescription'. Some of the specific proposals are bound to attract headlines, but it must be hoped that the package is treated as a whole and not condemned just because one or other high-profile recommendation is unattractive to a particular interest group (or indeed, the Government). Among the most controversial changes proposed are abolition of the requirement to provide LPI on pensions coming into payment in future (to make the cost to sponsoring employers lower and more predictable), removing the obligation for contracted-out benefits to include provision for spouse's pensions, and other changes which considerably weaken the Reference Scheme Test. Suggestions are made for converting GMPs to actuarial equivalents, but arguably it is regrettable that Pickering has stopped short of recommending abolition of contracting-out.

As widely predicted, it is argued that employers should be allowed to make membership of their pension scheme - including personal pensions, provided they chip in say 4% - a condition of employment. Of the two historic objections to this, concurrency has taken care of those new employees who already have a PP; the other, namely that those staying less than two years got a raw deal is addressed by a novel proposal similar to an Aries recommendation. There should be immediate vesting on joining (employers could still of course set a long waiting period), but the additional administrative burden is balanced by a proposal to allow trustees to automatically transfer accrued benefits below a 'de minimis' limit (£10,000 is suggested) to a stakeholder scheme, unless the Member objected or made a voluntary transfer within 6 months of leaving.

Other issues addressed include member communications (the preferred term for 'disclosure'), moving some of the present overload into an 'on request' category; dispute resolution (scrap the current prescriptive approach); Member-nominated trustees (endorsement of the one-third principle, with no opt-out); and making section 67 (scheme modification) workable.