Pension reforms could have big impact on retirement prosperity
- 7 October 2011
If you don't have a company scheme already and if you work at a large employer, from next year, you will be enrolled into a pension unless you actively opt out. You will be expected to contribute four per cent of salary, your employer contributes a minimum of three per cent though it could offer more boosting your pension or reducing your contribution, and the Government will provide one per cent in tax relief. Here is an explanation on the website of the Pensions Advisory Service.
Gradually in the years up to 2017 smaller and smaller employers will be required to offer a pension until most of the workforce is covered. You do not have to join the scheme but you do have to positively say you don't want to join, in a system known as auto-enrolment or soft compulsion. Employers are banned from trying to incentivise you not to join to save on their contributions and face severe penalties for doing so.
It is arguable that this is what the Prime Minister David Cameron might have had in mind, when he nearly suggested that the British pay down their credit card debt this week, before he changed the speech under pressure from the UK's retailers. But if this new pension scheme is going to work many people may have to find that extra four per cent. But it is employers and not employees that are already complaining about the burden.
On Pensions Age PwC says employers are wildly underestimating the commitment necessary.
- Government rolls out consultation on the Bank of England's powers over the UK's housing market
- Pension scammer warning as 77% say they don't know the difference between pension income reforms and pension liberation
- The ECB has missed the opportunity to end the European crisis
- Official numbers suggest strong rise in pension take-up as auto-enrolment gains traction
- E.ON launches cheapest energy deal on the market as 'big six' rise to the challenge of the smaller firms
- Average UK house prices climb to all time high but growth rate eases significantly
- Selling may not be the best policy when a star fund manager quits
- Two "highly competitive" savings deals hit the streets
- Barclays sets aside £500m for FX "investigations" as profits rise 5%
- Why UK monetary policy is still loosening