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There is renewed focus on the Pensions Bill currently going through Parliament and it is worth reminding ourselves of the changes it will make to the pensions landscape and some of the issues we think need addressing to make sure it is workable in practice.

Much of the attention has been on the new personal accounts scheme, but the Bill's central thrust is about placing new responsibilities on employers. The legislation will have important implications for all companies - even those who are already making generous pension provision - so it is important that providers work with advisers to help employers understand their role and guide them through their options. Although some doubts have been raised about the timetable, all this is set to 'go live' from 2012 and it is important to think about the possible implications now and to prepare for the changes.

The Bill will require firms to enrol all 'jobholders' - a category which will include temporary staff as well as permanent employees - automatically into a pension, so long as they are earning above £5035 a year and are more than 22-years-old.

Jobholders will be able to opt out if they wish, but the Bill establishes a minimum contribution in respect of jobholders who stay in. For employers this will mean paying at least 3 per cent on a band of earnings between £5035 and £33,540 a year, with employees themselves contributing a further 5 per cent, including tax relief. The concept of 'band earnings' includes bonus, overtime and commission payments in addition to basic salary.

So while there has been much talk of 'soft compulsion' on individuals in order to encourage them to save, for employers the compulsion is rock hard: they will be compelled by law to act, with penalties for failing to do so ranging up to a £50,000 fine or two years in prison.

They will be confronted with a choice of vehicles for meeting their new obligations: they can use a private scheme, personal accounts or a combination of the two. That decision will have significant implications for their business.

Personal accounts are effectively the default option for employers who do not have a scheme in place and are not willing to set one up. Last year’s Pensions Act established the Personal Accounts Delivery Authority to oversee the design of what is a brand new trust-based occupational scheme on a potentially enormous scale. The new legislation will give the authority the powers it needs to build that scheme. The detail of personal accounts is still the subject of much discussion and much of it will be determined in regulations after the Bill itself has passed into law.

The government has made clear it wants charges for personal accounts to be as low as possible but it seems to have backed away from its earlier insistence on an annual management charge of 0.3 per cent. The consultation recently conducted by the Personal Account Delivery Authority on the structure of charges also found significant support, including from us at Aegon, for the use of a small up-front contribution charge. This would help with the financing of the scheme, especially in the early years, and would reduce the level of risk being borne by the taxpayer - which ought to be a significant consideration in the present financial climate.

A further delivery authority consultation is expected in the near future on investment, looking at issues such as what range of funds, including Shariah-compliant and ethical funds, should be available and what the default fund should look like. Another consultation will examine what the decumulation options for members should be, and whether default annuity providers should set up income for those who do not choose the open market option. A final consultation - expected early next year - will look at the scheme rules for personal accounts scheme. This includes what the level of any contribution cap should be, and whether the scheme will accept lump sums as well as the standard regular contributions.

Early in the new year, the delivery authority is expected to begin the process of tendering for the delivery of various aspects of personal accounts such as communication, scheme administration - including the all-important collection of contributions - and, by no means least, investment management.

It is clear from all this that there is still a long way to go until personal accounts begins to take shape. Providers are in close contact with delivery authority and will be playing our part to help make them a success. Nobody, least of all anybody professionally involved in pensions, can afford to see such a high-profile failure which could act as the final straw for public confidence in pensions.

Commercial providers, of course, are keen to ensure that the employers we work with, and the individual customers we serve through them, continue to look to us to meet their needs - and that new customers join their ranks. The government, too, has said that it wants this to be the case, and for good reason. In most cases, members of the sort of workplace personal pensions we and other providers offer, receive more generous contributions from their employers and often also have additional benefits packaged in with this. More people joining good workplace schemes is a much better solution to the problem than everyone bundling into personal accounts and saving the bare minimum with no extras such as life cover or medical insurance.

It is clear, however, many employers will have some difficult choices to make when adjusting to their new responsibilities - and that they will need help. Automatic enrolment will mean that most firms with existing provision will face an increased take-up of an existing scheme. If take-up goes from, for example, 50 per cent to 75 per cent, that can be a big cost increase for a company to soak up. Of course, this is even more of a problem for employers with no existing provision. The temptation for firms to try to minimise that cost will be strong, especially in small- and medium-sized businesses where margins are tight and there is less ability to absorb costs elsewhere in the business. And the DWP is aware that this will probably be reflected in lower pay increases for employees.

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