About the trustee corporation
Background to Workplace Pension Reform
Population projections suggest that the number of people aged 65 and over will almost double by 2055. The Department for Work and Pensions (DWP) estimates that around seven million people are not saving enough to deliver the pension income they are likely to want, or expect, in retirement.
In its 2005 report to Government the Pensions Commission called for wider and fairer pension coverage. It also identified automatic enrolment into a workplace pension scheme and employer contributions as key factors in effectively tackling under-saving.
The workplace pension reforms, due to be introduced from 2012, place a new duty on employers to automatically enrol all eligible workers into a qualifying workplace pension arrangement.
Automatic enrolment is designed to make it easy for individuals to participate in pension saving, helping to overcome the inertia which prevents many people from saving currently. However, individuals will be able to opt out of workplace pension saving if they wish.
A new low cost, simple pension scheme – currently referred to as the personal accounts scheme - will be introduced to ensure that all employers have access to a suitable pension arrangement in order to fulfil their new duties under the reforms. The scheme aims to provide millions of people – typically those on low to middle incomes - with access to workplace pension saving.
This large and challenging programme is being delivered by the DWP in partnership with the Personal Accounts Delivery Authority and the Pensions Regulator.
The personal accounts scheme
The personal accounts scheme will operate as much as possible like any other trust based, multi-employer, occupational pension scheme and will be independent of Government. It is intended to complement existing workplace provision.
The scheme will be just one of the qualifying pension schemes used to fulfil the employer duties introduced under the Government’s reforms. The personal accounts scheme will be regulated by the Pensions Regulator in common with all other occupational pension schemes. It will have a public service obligation to accept any employer (and any qualifying worker) that wishes to use the scheme to fulfil their employer duties.
The personal accounts scheme will be low cost and simple to run, with low charges to help members keep more of their savings.
The trustee corporation
The trustee corporation will be a new Non Departmental Public Body that will be responsible for running the personal accounts scheme. In order for personal accounts scheme to be launched on time it is necessary for the trustee corporation to be established and take responsibility for personal accounts as quickly as possible.
Our current working assumption is that PADA will hand over functions to the trustee corporation as quickly as possible. At this time PADA will be wound up. We expect the trustee corporation to complete the setting up work begun by PADA, for example the final procurements and finishing the build of the personal accounts scheme.
Setting up the trustee corporation
The trustee corporation will be overseen by a chair, deputy chair and up to thirteen ordinary members. Together they will form the corporate trustee of the scheme. The trustee corporation will be supported by staff who will carry out the day to day running of the trustee corporations functions.
The Department now wishes to appoint a deputy chair and at least four additional members. The appointments will be made by the Secretary of State for Work and Pensions.
Further Information
For further information please read the information memorandum below:
