Today the DWP launched a six-week consultation on the operation of the Pensions Act 2008 requirement for employers to enrol eligible employees automatically into a qualifying workplace pension scheme and to make minimum contributions into that scheme. Entitled "Workplace Pension Reforms: Completing the Picture", the condoc runs to 218 pages, including 50 pages of draft regs, and is accompanied by a separate 65-page Impact Assessment. The consultation closes on 5 November 2009.

The DWP proposes staging implementation of the reforms by splitting employers into 25 - 30 groups according to their size (measured by their PAYE scheme), and requiring each group to start automatic enrolment on an assigned date over 3 years from October 2012 to October 2015. Generally, large employers are to be required to start automatic enrolment before smaller employers. Previously the Government had intended the phase-in period to be only 18 months.

The consultation proposes transitional periods for

(A) defined contribution schemes:

• A minimum employer contribution of:
  • 1 per cent (of the jobholder's qualifying earnings) from October 2012,
  • 2 per cent for a further year
  • 3 per cent thereafter

(B) defined benefit and hybrid schemes:

• Allowing employers to defer automatic enrolment for up to 3 years
• Requiring employers who close the scheme before the end of the period to automatically enrol workers into an alternative scheme and back-pay missed employer contributions.

One of the six sets of regulations included is a revised draft of the Pensions (Automatic Enrolment) Regulations 2009, on which the DWP consulted in March this year, to which the official Government Response also appeared today. Criticism by the 79 respondents of the tight and complex deadline structure has led to some significant relaxations, including an extension of the joining window from 14 days to 1 month. Generally, in fact, periods which previously were specified as a precise number of days are now set as one or more months. A pay reference period is defined as that over which the jobholder receives his regular wage or a period of one week.

The regulations also cover the operation of self-certification, whereby an employer whose definition of pensionable earnings differs from the qualifying earnings definition will be able to look forward 12 months and decide if the scheme will meet the minimum requirements. A certificate will remain valid even if up to 10% of members fall below the minimum standard, provided no individual member falls more than 5% below that standard. Annual reconciliation, whereby a check is made at the end of the 12 month period on whether the contributions have met the requirements, will continue to be an alternative compliance mechanism.