UK - New pension legislation will be unworkable because the government has failed to communicate with employers and the industry, experts warn.
The Society of Pension Consultants and the National Association of Pension Funds expected timescales and start dates for various proposals in the Pensions Bill well in advance of royal assent which is likely to be in November.
But in a scathing letter to the department for work and pensions, the SPC says there is “widespread general sentiment” that there will be too much to be done too soon if April 2005 is the predominant commencement date.
SPC pointed out that the withdrawal of limited price indexation for money purchase schemes meant systems and documentation needed to be changed by October to meet six-month pre-retirement notification requirements.
And it warns that final salary schemes will not have enough time to adapt decision-making, communication and their actuarial funding systems. Implementing annual benefit statements for deferred members is also expected to have a “major impact”.
The letter warns that, depending on the exact requirements, 2005 could “already be impossible” and 2006 “very demanding”. It feels 2007 is needed to allow “proper implementation”.
The NAPF echoed the concerns, warning there was still a lot of communication needed to educate fund sponsors.
Chief executive Christine Farnish (pictured) said: “Most employers don’t realise the implications of the Bill and the government is keeping very quiet about it.”
She warned that employers will be expected to contribute more money and follow increasingly cautious investment strategies.
Farnish claimed the DWP was “very challenged” by the complexities of the issues in the Bill.
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Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers