While the full proposals include reforming the State Pension to make it simpler and more generous, and extending people’s working lives, the key reforms for employers relate to the Government’s ideas for making it easier for more people to save for retirement.

The Government estimates that about seven million people are currently under saving for retirement. As a result, it is putting the onus on employers to help encourage more people to save:

• You’ll be required to automatically enrol employees into a ‘qualifying pension scheme’. This could be your own Company Scheme if it meets certain criteria or Personal. Accounts, a simple, low-cost pension scheme being introduced by the Government and administered by Tata Consultancy Services (TCS) known as the National Employment Savings Trust (NEST).
   
• You’ll be required to contribute a minimum of 3% of each employee’s eligible earnings which is intended to incentivise them to join. Their own contributions and tax relief will be added to this to meet a minimum 8% contribution rate.

The Government recognises that these reforms continue to place employers at the heart of pension provision and that they can be successful only with your support.

It is therefore proposing key measures designed to minimise the burdens on you:

• Compulsory employer and employee contributions will be phased in.
• Simple delivery model for Personal Accounts.
• Simple, straightforward, qualifying criteria for existing Company Schemes, meaning many existing schemes will meet them, perhaps with minor changes.
• A ‘light-touch’ but effective compliance regime for new employer duties such as automatic enrolment.