Compulsory Pension Provision - Update

In our December article we set out the Governments proposals for the introduction of Compulsory Pension Accounts from 2012.

Whilst the Industry recognised the scale of the task ahead in the delivery of an IT system to accept premiums and administer 6 million plus new joiners into a pension scheme on the same day, it seemed that PADA (the Personal Accounts Delivery Authority) did not. Until now!

To reduce the risk of "meltdown" on day one, PADA are considering a "soft" launch.

This announcement comes at the same time as the Committee on Public Accounts has thrown doubts on the 2015 deadline for the ambitious £12bn NHS patient record sharing project.

Although launched in 2002, the project has been dogged by problems not only with the system but also its suppliers, to the extent that the original completion date of 2010 has been put back by up to five years.

What is clear, is that despite the system not being fully functional, NHS staff are having to work around it as it is being rolled out. This is obviously costly,  but as the tax payer picks up the bill, this does not seem to bother the Government.

With regards to Personal Accounts, the new implementation proposals under consideration by PADA would see volunteer employers and employees being invited to take part in low volumes from as early as 2011. This will act to test the system, as PADA admit that they do not know what is or is not going to work until the system goes live. There after employers would join in batches over a period of 12-18 months so that  by 2013-2014, all employers, even the smallest, will be involved (unless they have a scheme in place which qualifies for an exemption).

Whilst this eases the administration issues for PADA, unless a timetable is provided to employers of their expected entry date into the scheme, it will not help employers to plan for when the additional administration / costs will take affect. With the Government's track record on computerisation we should expect delays, however, unlike the NHS project, any delays and workaround costs would be met by employers.

We would therefore suggest that employers still look to a date of 2012 for planning purposes, whether it be to join Personal accounts, or work towards an exemption.

Find more detailed information on Compulsory Pension Provision here