The DWP has issued a briefing paper concerning a proposal to allow certain employees to be exempt from automatic enrolment. These include those with HMRC enhanced or fixed protection and those in a notice period for leaving on their automatic enrolment date. There will be formal consultation on this in the autumn.
Click here to read the briefing paper.
In addition, draft regulations have been laid before Parliament which are intended to prevent consultants' fees incurred by employers being deducted from member accounts in automatic enrolment schemes. The effect of the regulations is that a scheme which allows for such deductions will not qualify as an automatic enrolment scheme. The draft regulations provide that a scheme that provides money purchase benefits must not include a provision allowing deductions to be made from a jobholder's contributions or investment returns, where the amount is to be paid to a third party under an agreement between the employer and the third party.
Click here for the draft regulations.
These draft regulations stem from a statement made by Pensions Minister Steve Webb on 10 May 2013 (payments made under agreements made before that date are not caught). Our concern is that the wording of the proposed new regulation is very wide. It catches any wording which "allows for" deductions payable to a third party, not just preventing deductions from actually being made and it does not limit the deductions to "consultants fees" (as suggested by Steve Webb's statement). Careful consideration should be given where it is proposed to use a scheme for automatic enrolment, particularly any rules relation to the deduction of costs and expenses from member contributions or accounts.
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