The big issue this autumn has been the Government's plans for Auto-enrolment, the subject of a massive 218-page consultation. During the brief 6 weeks allowed for comment, the DWP was anxious that the condoc should be read alongside:

• the 44-page Government response to the March 2009 consultation on automatic enrolment regulations; and
• a 65-page impact assessment, which estimates costs to employers arising from the regulations included in this consultation document.

Predictably, the Government was heavily criticised for squeezing the consultation period to just 6 weeks. The draft legislation bears all the hallmarks of traditional British Government strategy (ie try to anticipate and block every conceivable loophole), instead of recognising that actually most employers - and in particular those already providing workplace pensions - would be anxious to comply if only the Government wouldn't make it so difficult. Aries prepared a separate summary of the draft legislation, available on request.

Personal Accounts - Scheme Order and Rules

The DWP has also published its official response to the 36 submissions received about its consultation on how the Personal Accounts scheme will be run (see Aries article). "Overall," the DWP says, "we are proposing to make a few minor changes to help clarify understanding. Our overall policy approach remains unchanged." Regular commentators on DWP consultations may feel wearily unsurprised by this outcome.

Whether this seemingly complacent tendency lay behind a late but very strong DWP entry for 'pensions gaffe of the year' competition is unclear. The Occupational and Personal Pension Schemes (Authorised Payments) Amendment Regulations 2009 (SI 2009/2930) came into force on 1 December 2009 alongside the HMRC regs* they were intended to mirror, following a six-week consultation which closed on 29 September 2009 (see Aries article).

* The Registered Pension Schemes (Authorised Payments) Regulations 2009 (SI 2009/1171)

The draft regulations had been generally seen as a welcome and uncontroversial move to align DWP and HMRC legislation, particularly to allow trivial commutation on the new 'scheme-specific' (£2,000 limit) basis of GMPs, S.9(2B) rights and Protected Rights. Para 8.2 of the accompanying Explanatory Memorandum) to the regs asserted that

"Comments received during the consultation demonstrated that stakeholders were happy that we were reflecting HMRC's changes. The comments were mainly of a minor technical nature."

Weeks later, in its official response to the consultation the DWP was singing a different tune. No fewer than five organisations had commented, it admitted,

"on regulation 4(4)(c)1 which inserts new regulation 60 (1)(b)(i)(cc) into regulation 60 of the Occupational Pension Schemes (Contracting-out) Regulations 1996. The intention of this new sub-paragraph is to allow a guaranteed minimum pension (GMP) to be taken as a lump sum, if it qualifies as an authorised payment, as set out in Part 2 of the [HMRC Regs]. Respondents expressed concern that although the inserted sub-paragraph (cc) is correct to refer to payments under section 164(1)(f) of the Finance Act 2004, it does not allow for the lump sum to be taken as an authorised payment because the payment could not then qualify as a "trivial commutation" permitted under the lump sum rule in section 166 of the Finance Act 2004."

"Unfortunately, due to an oversight, the wording of the regulation has not been amended prior to the regulations coming into force. The Government is grateful that this issue was highlighted and will consider correcting this provision by inserting an amendment into a package of miscellaneous amendment regulations planned for introduction in April 2010. The amendment would remove the reference to section 166."

The upshot is that if a member's benefits include a GMP, they still cannot be trivially commuted until the defective regulation is corrected. It is unclear what action should now be taken by schemes which assumed that the new legislation would correctly reflect the well-understood policy intention and pressed the button accordingly, on or shortly after 1 December.

The DWP response to the consultation also notes that three respondents had suggested that the draft regulations be amended to allow the lifetime allowance tax charge and a lifetime allowance excess lump sum to be paid or taken from contracted-out funds held in schemes. This was deemed to be outside the scope of the consultation and there are no plans to permit such lump sum payments.