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Pensions: Personal Accounts

My Lords, I hope I can respond positively to my noble friend. Where a good occupational pension scheme is already in place, it will be possible for the employer to be exempt from the personal accounts because employees will be auto-enrolled into the firm’s own scheme. We want to ensure that the process by which scheme exemption can be given will be as straightforward and non-over-regulated as possible but with the guarantee that at the very least it will be equal to, if not, as one would hope with many schemes, better than what is available through personal accounts. We have enjoyed many constructive discussions with employers about the principles behind personal accounts. I can assure my noble friend that if employees are auto-enrolled into the personal accounts the employer has no option but to pay the 3 per cent contribution within the broad £5,000 to £33,000 band. Clearly there has to be some regulation to ensure that employers are compliant, and we want it to be in three stages. The first is a light-touch principle; it is right to assume that most employers will do the right thing. Secondly, we must ensure that education and advice are available to companies to make sure they know what is the right thing. Thirdly, there will have to be a backstop: a mechanism to ensure that where there is non-compliance, we are enabled to take decisive action against those companies. The details of that will be consulted on, but I hope I can satisfy my noble friend on the broad principle of how that will operate.