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
- British homeowners collectively estimated to have £433bn in savings despite the paltry rates on offer
- Barclays and Lloyds top the City watchdog's complaints list of shame for the second half of 2014
- Mortgages approvals climb for the third successive month to reach a six-month high in February claims Bank of England
- Don’t ignore the benefits of financial planning - at the start of the tax year...
- Share tips: Five European growth “gems” you may have missed
- Mindful Money's weekly shares watch: Kingfisher, Marks & Spencer & Booker
- Revealed: The top five credit cards to use while abroad
- Just over 10% of retirees expect to cash-in on the pension revolution
- Child Trust Fund transfers to Junior ISAs go live next week but where should you invest?
- The Far East is the stand-out region within Emerging Markets claims Fidelity - where to invest...