GMB on pensions bill

Full statement is here, below are the key points on Personal Accounts. Note the emphasis on 50/50 trustees on the PAs board.

Personal Accounts
GMB welcomes the introduction of Personal Accounts (PAs) but has some concerns about the enforcement regime that will be applied and the level of the savings that are likely to be produced.


Holders or potential holders of PAs should not be subject to less favourable treatment by their employer on the basis of their pension choice

Government (through PADA if necessary) must ensure a proactive enforcement approach that monitors PA take up and investigates employers with low take up

There must be a genuine penalty for employers that do not fulfil their obligations including the payment of all contributions the employer’s failure has caused the jobholder to lose out on

Auto-enrolment is key, the automatic re-enrolment of jobholders should occur no less frequently than every three years irrespective of whether it is the exempt scheme or PA framework in place

The use of the individual opt out must be a decision taken by the individual without interference from their employer or other individuals on behalf of the employer

Exempt schemes should be genuinely better value for the jobholder than PAs, in the case of defined benefit schemes, this should include reference to the member contribution rate

GMB believes that the contribution levels proposed provide an absolute minimum, employers and employees should be facilitated and encouraged to contribute more where appropriate

The start up rate of contributions (8% of banded earnings) should be reviewed regularly in a similar manner to the review of the National Minimum Wage by the Low Pay Commission

GMB is disappointed that the banding of contributions is proposed. The limitation of employer contributions to 3% of earnings between £5,035 and £33,540 rewards low paying employers and disadvantages a key section of the current non saving working population: part time workers, particularly those with multiple employments

GMB believes that the employer contribution should be paid on all earnings up to £33,540 with an option for the individual to contribute on the first £5,035

Given the advanced notice employers are having of the introduction of PAs, GMB does not believe there is any need to phase in the mandatory contributions

The governance arrangements for PAs should include representation of members in line with the government’s commitment to have 50% member nominated trustees in occupational pension schemes

Government should monitor the effects of the annual limit on contributions of £3,600 and review whether a lifetime limit would increase flexibility and assist target groups such as those who have taken career breaks and wish to make up missed contributions

PAs should have the facility to accept transfers in to improve the efficiency of individuals’ lifetime pension savings