Pensions Bill

The noble Lord, Lord Oakeshott, pre-empted the thrust of my reply but I shall give it anyway. We are invited to consider two matters: first, the extent to which the delivery authority will liaise with established pensions and financial bodies; and, secondly, how we intend to ensure that the personal accounts scheme is designed in a way that minimises the burdens on employers. As regards the first amendment, the Bill does not specify with whom the authority should consult. This is to allow the delivery authority to co-operate and consult with whomever it thinks appropriate. It is a matter for the authority’s discretion, based on the expertise and experience of its members. We drafted the Bill in this way intentionally to allow the members of the authority to consult with all interested parties. I would expect the delivery authority to build effective co-operation with a number of bodies which can advise on financial, commercial and operational consequences. It would be an integral part of the successful development of personal accounts. Therefore, it is hard to imagine that it would choose to operate without the benefit of a good working relationship with the Pensions Regulator, the Financial Services Authority and, of course, the Secretary of State. I am sure that the authority will need to consult a number of other organisations as well, including experts in the pensions and finance industry. On the second amendment, we do not underestimate the important role of employers in ensuring that our reforms are successful. We recognise that the introduction of personal accounts willplace a burden on some employers, in the costsof additional contributions, the administration of automatic enrolment and the payment of contributions. I will explain how we intend to minimise the impact. Looking first at contribution costs, the White Paper that we published in December set out our proposals for helping the smallest businesses to cope with any increased costs. Those proposals include phasing in contributions to personal accounts, providing assurance on the 3 per cent level of employer contribution by setting it in primary legislation, and providing a five-year lead-in before contributions start in 2012. We intend to legislate for those proposals in the planned second pensions Bill. We committed in the December White Paper that minimising the administrative burden on employers would be a guiding principle in the development of personal accounts. We recognise that it is important to base the design of the administration on good estimates of the administrative costs to employers. Following the publication of the White Paper andthe accompanying regulatory impact assessment in December, we invited views on the processes and underlying assumptions that underpin our estimates. We also set up a cross-government group of experts to work together on refining the assessment of the cost impact on employers. We will publish our revised estimates as part of the regulatory impact assessment accompanying the proposed second Bill. I recognise that the noble Baroness, Lady Noakes, wishes to probe the objectives for the delivery authority, and she has sought to require the authority to ensure that its actions and advice support the objectives of minimising the burdens placed on employers as a result of the personal accounts proposals. Noble Lords will be well aware that the purpose of the Bill is to focus on preparing forthe delivery of the personal accounts reform. The Government will continue to set the policy framework for personal accounts. In so doing, we will continueto balance the need to minimise employer burdens with the need to address undersaving, by delivering a low-cost scheme that complements the wider pensions market. In the light of that, it would serve no useful purpose for the authority to be additionally required in this legislation to ensure that its actions and advice minimise burdens on employers. I have made clear our intent on taking this forward.