Auto enrolment schemes need reforming
New compulsory workplace pension schemes that will be used by millions of people are too complex and often give poor value money, the Office of Fair Trading (OFT) has said.
The trading watchdog, which examined the £275bn defined contribution pensions market, said it had agreed reforms with companies and The Pensions Regulator as the auto enrolment programme expands.
The defined contribution pension scheme will gradually see all workers aged between 22 and the state pension age who are not in a workplace pension signed up to one. Around five million people are saving into DC pension schemes. This is expected to increase by up to nine million savers over the next five years, after the government's introduction of AE last October.
The OFT's criticism, is the latest sign that the new workplace pensions will be a headache for payroll and finance departments. Experts have said that the pensions, which will be phased in from October, will be expensive for businesses to start and run and will require a lot of preparation.
The OFT report said...