Pension Pot Buck Stops With Plan Sponsor
18 July 2012 (PLANSPONSOREurope.com) - Proposals to have defined contribution pension pots follow employees from company to company may be good news for UK workers but will inevitably lead to an extra level of administration for plan sponsors, Robin Simmons, partner and head of law firm Sackers' scheme governance team has told PLANSPONSOR Europe.
Yesterday Minister for Pensions Steve Webb announced that the government is to develop a 'pot follows member' design.
Simmons told PLANSPONSOR Europe: “It is an extra layer of administration. It looks likely it’s going to fall upon the new employer so the person taking on an employee will have to look at the pension arrangement they have come out of and tell them they will be automatically transferred if they fit within the relevant framework.
“There’s talk of employees being able to opt out so there is the question of being able to operate and manage whatever that opt out facility is. It is not clear what that might be. The pension industry has raised lots of issues like how is that process going to work? How are we going to do opt outs? What do we do about legacy schemes? And this is a plea from Government to say we want to work with the pensions industry to button down all of these issues and give them some thought so there isn’t any detail or granularity or whatever you want to call it.
“The buck inevitably is going to have to stop with the employer taking on a new employee.”