IT WAS unimaginable five years ago, but all of a sudden pension lawyers are the toast of the City. After years of keeping themselves to themselves, and occasionally adding a last-minute pension provision to the end of a sale and purchase agreement, now hardly anything happens without a pension lawyer’s say-so.

When Lord Turner of Ecchinswell published his much anticipated recommendations for British pension reform last Wednesday, clients were once again turning to their legal advisers for clarification. His proposals included the creation of a national pension savings scheme (NPSS), where those not covered elsewhere would be automatically enrolled, and given the choice of whether to opt-out.

He also suggests gradually increasing the state pension age, possibly to 68 by 2050, and revisiting the age discrimination legislation.

City pension lawyers say that it is the prospect of the NPSS that is of most concern to their corporate clients. It would mean default pension contributions for most people of 8 per cent, with 4 per cent of that coming from the individual, 3 per cent from the employer, and the rest from tax relief.

Danny Tsang, a partner in the pensions and incentives group at McDermott Will & Emery in London, says: “This is really just another form of tax — you might as well just pay it all into the Treasury in the form of additional insurance contributions. Surely the existing arrangements, stakeholder or pre-existing personal pension arrangements, could have been adapted to take this particular style, rather than taking four years to go through consultation on a new regime.”

He says that it could mean a sizeable extra workload for companies, as many workers at the start of their careers may choose to opt out, which could create an administrative nightmare. “If the NPSS were introduced,” Tsang says, “there will be a lot of advice that clients will be seeking in terms of redesigning their pension schemes. We will obviously follow each stage very closely to see what needs to be done.”

Before any of Lord Turner’s proposals became law though, there would have to be a White Paper, consultation and then proposed legislation, so any changes look some way off.

Kate Richards, a pension partner at Nabarro Nathanson, says that the Turner report may be unrealistic when it suggests that where employers now provide more generous provisions than the NPSS, they should opt out of the national scheme and keep up their existing arrangements. “The danger is that for employers already providing in excess, they will level down to the basic,” she says. “There is an obvious tendency that if you can spend less, you spend less.”

She says the impact that Lord Turner’s recommendations could have potentially on the age discrimination legislation is one of the biggest issues for lawyers and their clients. The new laws are to come into force next October and are at the consultation stage, with companies watching closely to make sure that their systems will comply.

The legislation says that there will be a default retirement age of 65, above which it will be possible to dismiss people purely on the ground of age. Lord Turner says that there should be no age limit and workers of any age should be dismissed only on the basis of performance.

The age discrimination rules are being changed in line with an EU directive so cannot, in theory, be delayed. Richards says: “This throws the whole age-discrimination legislation back up in the air. This changes fundamentally the way the regulations were seen to be going to operate.”

Still, the situation remains very much one of wait-and-see for human resources directors, pension fund trustees and their advisers. Of more concern at the moment are the workings of the new Pensions Protection Fund and the Pensions Regulator, which have combined to put pension issues at the heart of business strategy and key to any corporate transaction.

A tax regime for all types of pension schemes comes into effect on April 6 next year — dubbed A-Day by the industry — and is said to be the biggest change to pensions legislation in a lifetime. Many pension lawyers were relieved that Lord Turner did not propose any further amendments to the system of pensions tax relief, beyond the simplification changes already due then.

What is more, the arrival this week of laws allowing civil partnerships, is necessitating further revision of most pension-scheme terms.

Andrew White, the head of pensions in the London office of Mayer, Brown, Rowe & Maw, says: “Our pensions lawyers are working extremely hard at the moment and I think Lord Turner is a way down the line yet. But when it does get implemented, our employer clients will be looking very closely at what they have to do about the national pensions savings scheme.”

While the Turner report may not be the hottest topic at pension trustee meetings, it has nevertheless put the whole debate right back on the agenda. Claire Carey, a partner at the boutique pensions firm Sacker & Partners, says: “This report doesn’t actually make anything more concrete, but it is going to cause a lot of public debate. Most of our clients are interested because when you are running an occupational pension scheme, it’s always important to know what the state scheme is doing and what the state retirement age is going to be.”

It may be some way off, but Lord Turner has certainly ensured the phones of the City’s pension lawyers will continue to ring off the hook even after A-Day.

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