On the go: The Department for Work and Pensions has concluded that the current tests used by defined benefit and hybrid schemes for auto-enrolment suitability are fit for purpose.
In a consultation response published on Thursday, the government stated these tests will remain unchanged until 2023, when the next statutory review will take place.
In September, DWP invited views from the industry on the two alternative tests DB schemes can use to demonstrate the quality of retirement they provide for the purposes of auto-enrolment.
Trustees and employers have in the past five years been able to use two alternative tests to check whether they are meeting their auto-enrolment duties: a test that enables certain schemes to use the money purchase quality requirements based on a minimum contribution equivalent to 8 per cent of qualifying earnings, and a cost of accruals test based on the cost to the scheme of the future accrual of active members’ benefits.
Before the introduction of the new tests, pension funds had to meet the test scheme standard, which allows schemes to demonstrate they meet the minimum necessary standard by comparing their pension benefits with a hypothetical test scheme.
In the consultation response, DWP stated that “the overall objective of the alternative quality requirements to act as simplified quality tests for relevant pension schemes is being met”.
However, the government will seek to work with organisations that have made suggestions on technical changes to the statutory guidance that supports the test for DB and hybrid schemes.
Alongside this, the government says it will seek to understand “what scope there might be for proportionate easements in the future that preserve the rigour of the automatic enrolment regulatory framework”.
