The weight of the responsibility

The government's insistence that existing schemes conform precisely to the minimum contribution test - based on 'band earnings' rather than the basic salary approach used for the vast majority of schemes - adds administrative complexity to the mix as it will require employers to test that their schemes meet the minimum in respect of each and every employee. If that is not the case, the shortfall will have to be communicated to the employee and someone - the employer, the employee or a combination of the two - will have to make up the difference. This sort of administrative burden risks pushing employers who are currently making generous provision down to 'mere compliance' which would have the overall effect of reducing contributions, particularly for the low paid and especially women.

However, it will not always, or even most of the time, be in the interests of employers - still less their employees - simply to 'level down' to the bare minimum. Pension provision can act as a powerful recruitment and retention tool and, as part of an overall employee benefit package, sends an important message to staff that their welfare is valued. When it is done right, private provision also makes compliance less of a headache for employers.

The onus is on providers and advisers to present employers with an overall offering which meets their needs. This means good, slick administration, easy contribution collection and help with complying with their responsibilities - including communication with members. In short, employers will continue to choose private provision if it offers a better service than personal accounts. And that is good news for everyone: providers, advisers and the most important people of all - our customers.

Rachel Vahey is head of pensions development for Aegon UK