According to the Department for Work and Pensions, plans to introduce a “pot for life” for employee pensions won’t go ahead.
The previous government proposed the introduction of a lifetime provider (LPM) which would allow employees a single retirement plan throughout their working life, regardless of how many jobs that they had held.
In the Autumn Statement of last year, then-chancellor Jeremy Hunt stated that the government would allow workers to choose the scheme into which their employer contributes.
Andrew Blair, the head of auto-enrolment policy and Nest policy for the DWP told the Chartered Institute of Payroll Professionals this month that “the government does not pursue [the LPM] currently”.
The announcement will likely be welcomed by payroll and HR professionals who were concerned that the LPM would lead to increased administrative burdens.
An analysis conducted by the Pensions and Lifetime Savings Association earlier this year found “little evidence” to support the idea that the model was beneficial for savers.
The PLSA stated that the model will “disproportionately affect less wealthy and less educated” savers who currently benefit from bargaining power and the governance of their employers.
Samantha O’Sullivan is the policy and advisory leader at the CIPP. She said: “We’ve been working closely with our members in order to provide them a forum to voice their concerns about the proposed lifetime provider pension model.
We are happy that our voice was heard after our ongoing consultations with the DWP. Payroll professionals would have been the ones who faced the brunt increase in workload under this new model.
The budget is on the horizon and we expect more changes to come in the next few months.
The Autumn Budget could still include changes to pensions, even though the Labour government reportedly scrapped its plans to add national insurance on employer contributions.
They could be in the form a change to tax-free withdrawals of cash from pensions or a flat tax rate on pensions.
Personnel Today offers Payroll Opportunities
Subscribe to our weekly HR news and guidance
Every Wednesday, receive the Personnel Today Direct newsletter.
Find more payroll jobs
