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.
Mindful money Mortgage Tool Box
Looking To Re-mortgage
How Much Could You Borrow
How Much Is Your Home Worth
Find a Mortgage Advisor
- At last the real scandal emerges - the lid is lifted on the disgrace of old style overcharging pension contracts
- Experts tip the stocks to watch in 2015
- Inflation falls to 12-year low of 1% as petrol and food prices drop
- Russia raises interest rates to 17%, but rouble continues to plummet
- What does 2015 hold for the world's developed markets?
- Co-op fails Bank of England stress test
- MPs warn pension freedoms risk being next mis-selling scandal
- Britain is swiftly becoming of a nation of ‘pre-tirees' claims new report
- BT in exclusive talks to buy EE for £12.5bn
- UK starting salaries among the lowest of major European economies