Certifying a pension scheme for auto-enrolment

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The Department for Work & Pensions (DWP) has updated its guidance on certifying money purchase and defined-benefit (DB) schemes for auto-enrolment. Employers preparing for staging should review the clarifications and changes in the new guidance to ensure that they can certify their scheme on the correct basis. Allen & Overy highlights the key changes in this briefing. Employers who have already certified their auto-enrolment schemes should also review the new guidance to check that no new issues arise as a result of the changes.

Where a DB scheme, or the DB element of a hybrid scheme, is being used as an auto-enrolment scheme, in order to meet the relevant quality requirement the scheme must have a contracting-out certificate or meet the test scheme standard in relation to all the relevant jobholders.

Employers can determine whether their scheme meets the test scheme standard so long as actuarial calculations or assessments are not required. If pensionable earnings in the scheme are not the same as qualifying earnings in the notional test scheme, self-certification may still be possible using a simplified test based on the scheme accrual rate and the ratio of the scheme’s definition of pensionable pay to final qualifying earnings. More complex comparisons will require actuarial certification. The guidance is statutory — employers and actuaries are required to follow it when certifying a scheme…

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