Coalition government commits to auto-enrolment

The coalition government has confirmed auto-enrolment into workplace pension schemes will go ahead.

The Con-Lib coalition released the full details of its deal this morning.

It made a new promise to simplify the rules and regulations which have hindered occupational pensions in the past. It added it would encourage companies to "offer high-quality pensions to all employees" and pledged to support auto-enrolment.

The planned roll out of auto-enrolment into qualifying workplace pension schemes or NEST is set to start in 2012.

EEF head of employment policy David Yeandle said the new government's pledge to reinvigorate occupational pensions was aspirational and backed simplification.

However, he said: "The government will need to move quickly and positively if it is to achieve its aspiration to reinvigorate occupational pensions as all the evidence is that in the private sector we are reaching the end game for defined benefit schemes."

The coalition agreement also reaffirmed the government's commitment to establish an independent commission to investigate public sector pensions.

The agreement - delivered today by the prime minister David Cameron and his deputy Nick Clegg - said the coalition will "commit to establishing an independent commission to review the long-term affordability of public sector pensions, while protecting accrued rights".

It also said it would simplify the rules and regulations relating to pensions to help reinvigorate occupational pensions - encouraging companies to offer high-quality pensions to all employees.

The government said it will work with business and the industry to support auto-enrolment and also end the rules requiring compulsory annuitisation at 75.

The coalition has also pledged to restore the earnings link for the basic state pension from April 2011, with a ‘triple guarantee' that pensions are raised by the higher of earnings, prices or 2.5%.

And it will phase out the default retirement age and hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.

It also said it intends to implement the parliamentary and health ombudsman's recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.

In addition, it will explore the potential to give people greater flexibility in accessing part of their personal pension fund early.