Government considers added layer of AE legislation

A spokesperson for the Department for Work and Pensions said it needed to ensure people saving in the workplace through the reform continued to have access to “value-for-money, high quality schemes”.

“Auto-enrolment has been specifically designed so that employers do not need to seek advice when choosing a scheme,” said the spokesperson.

“But as we extend the duty to the smallest firms by 2018, we are looking at whether we need to have legislation in place that sets further minimum standards.”

Expectation is growing that such standards would focus on the governance and administration side of schemes’ operations.

Adrian Boulding, pensions strategy director at Legal & General, said some form of legislation on administration would be important if the government intends to implement its pot-follows-member plans for pensions consolidation effectively.

“If the government wants to do pot-follows-member then finding a way for the industry to raise its game on data standards is crucial for that, and it would seem logical for [the government] to take powers to insist that schemes operating in this space would need to meet certain administrative standards,” he said.

If schemes are unable to meet the standards required, the government should be able to say they are unable to “play the game anymore”, Boulding added.

It is anticipated that these minimum standards could cover all schemes that are being used for auto-enrolment, and would be a separate piece of work to the recently announced simplifications to the reform.

Introducing an approach that covers all arrangements could help to tackle any disparity between different types of schemes, said John Lawson, head of policy for corporate benefits at Aviva.

“There are governance structures out there that are clearly not working to my mind. It’s a big issue given that we’ve got auto-enrolment. I think it is a great idea to have common standards and I would go for the close and continuous approach,” he said.