First ‘section 89’ report on auto-enrolment
The Pensions Regulator has published its first ‘section 89’ report in relation to automatic enrolment (under section 89 of the Pensions Act 2004, the Pensions Regulator may, if it considers it appropriate to do so in any particular case, publish a report of its considerations in relation to the exercise of its functions). This report relates to automatic enrolment failings by Dunelm Soft Furnishings Ltd.
Dunelm’s staging date for automatic enrolment was 1 April 2013 so they were required to complete registration, indicating that they had fully complied with their employer duties, by 31 July 2013. The company did not complete registration and were contacted by the regulator. When Dunelm did complete registration, the regulator received information which led it to believe that the company may not have fully completed their employer duties.
Following a statutory inspection at the company’s head office, the regulator found that Dunelm had failed to enrol a number of its employees on time and as a result had not paid across sufficient contributions to its pension provider. The reasons for the failings were a flawed payroll solution, key members of staff leaving at critical times and data quality issues.
Dunelm is now compliant with its automatic enrolment duties, but the regulator wants other employers to learn from Dunelm’s experience www.thepensionsregulator.gov.uk/docs/section-89-dunelm.pdf).
NAPF research on Budget reforms
Over a quarter (28%) of consumers are now more likely to start saving or save more into a pension following the reforms announced in the Budget, according to research by the National Association of Pension Funds (NAPF). The research found that young people (age 18 to 24) were the most likely group to save into a pension. Lower income respondents (a combined household income of less than £14,000 a year) also said they felt more attracted to pension saving.
In a separate poll asking defined contribution (DC) pension schemes about the proposed ‘guidance guarantee’, more than three quarters (78%) said they did not understand what the Government expects them to deliver. 57% said they would struggle to deliver the service ahead of the April 2015 deadline.
LGPS investment changes
The Department for Communities and Local Government (DCLG) has issued a consultation paper proposing that all £85bn of listed assets held by the Local Government Pension Scheme (LGPS) should be switched to passive management, accessed through a common investment vehicle. In addition, all ‘fund of funds’ arrangements should be replaced by a common investment vehicle for alternative assets. These proposals would save up to £660m per year in investment costs.
The proposals do not go as far as replacing the 89 separate funds that currently make up the LGPS with a smaller number of merged funds. The DCLG was concerned that this would result in a loss of local accountability on key matters such as asset allocation. However, Edmund Truell, chairman of the London Pension Fund Authority, accused the Government of being “driven into a blind alley by vested interests and the forces of conservatism”.
Company news
The Court of Appeal has upheld a High Court decision that employees of Honda of the UK Manufacturing Ltd (HUM) are entitled to the higher level of benefits earned by their colleagues at Honda Motor Europe Ltd (HME) between 1986 and 1998. HUM were meant to receive a lower level of benefits on joining the Honda Group UK Pension Scheme but the deed of adherence did not mention this. The cost is estimated to be £47m on a scheme funding basis.
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