Scheme order and rules

The Government and PADA issued a joint consultation paper titled Pensions Consultation on Draft Scheme Order and Rules that set out the proposals on the legal framework for NEST (National Employment Savings Trust) – the scheme order and rules.

Pensions Act 2008 included enabling powers to allow a pension scheme to be established through secondary legislation. In common with many other occupational pension schemes, NEST is being established under a trust, the terms of which are set out in the scheme order and the scheme rules.

The scheme order is the equivalent to a trust deed for a conventional trust-based pension scheme. It outlines the main parameters of the scheme and includes details on, for example eligibility criteria, and member and employer participation. The order is a statutory instrument and will be subject to affirmative Parliamentary scrutiny.

The scheme rules set out the lower-level detail within the parameters of the order, for example details about pension transfers. The rules are non-legislative – this is to give the trustee corporation the flexibility to make any necessary changes to the detail of the scheme in due course.

However, the initial set of rules will be made by the Secretary of State alongside the scheme order.

The consultation ran for 12 weeks and closed on 20th July. On 26/10/09, the Department for Work and Pensions (DWP) and the Personal Accounts Delivery Authority (PADA) published a summary of responses to the joint public consultation on NEST: Pensions – Consultation on the draft scheme order and rules. The document summarises stakeholders' views to the consultation questions and provides the Government's and PADA's response.

DWP and PADA received 36 written responses to the consultation from the pensions industry, employers and organisations representing employers' interests as well as collecting views from PADA's advisory committees. There was broad support for the overall policy approach. No substantial policy changes are recommended as a result of the consultation. However, both DWP and PADA are proposing a range of minor drafting amendments to make the policy intent clearer and to clarify meaning.