SPC attacks complexity of Pensions Bill proposals

The trade body said the Bill was "reminiscent" of reassurances the industry received 30 years ago that contracting out of the state scheme would prove to be a straightforward process.

In a letter to the department for work and pensions and Conservative pension spokesmen Chris Grayling and Nigel Waterson it said: "This, unfortunately, has proved to be very far from the reality."

SPC added clause 12 of the Pensions Bill was particularly complicated.

It said: "It would effectively require scheme rules to adopt an underpin, so that, for each employee, over each pay period – the scheme must check whether 8pc of basic pay is greater than or equal to 8pc of total pay between £5,035 and £33,540, with total pay very likely to fluctuate."

It added: "Even if a workable legal basis can be established for taking these additional contributions from employees, they will be unexpected deductions, from, say, a bonus, which would have a particularly negative impact on lowly to moderately paid employees."

SPC added: "Potential members of personal accounts will probably not generally be actively awaiting the opportunity to join and might well exercise the option to opt out if they perceive that the system will not work properly."