The Department for Work and Pensions has carried out research and revealed that more than half of employers and employees support the announcement of for auto-enrolment for future pensions which will come into play during 2012.
Workers will automatically be enrolled in company pension schemes
The scheme which was put together by the previous Labour government will ensure that the current seven million workers who are not saving enough will have a comfortable retirement. The nature of the scheme means that workers will automatically be enrolled in company pension schemes, retaining the right to opt out.
Many surveys have revealed a strong support for the plans, but there are justifiable fears. Minimum employer contribution level may attract firms to pay less into their staff’s pensions. Once the scheme is in place employers only need to pay in 1% of their employee’s salaries thus an employer who currently pays more than this has less incentive to do so when regulations say otherwise.
“Pension time bomb ticking away”
“I believe that it is a positive step on the government’s part, trying to put the ball in the individual’s court as it were. There is a pension time bomb ticking away with generations of retirees set to live their twilight years in poverty due to a lack of setting up a pension. With measure now in place to ensure many more people have pensions, I believe that people will take more of an interest in their retirement planning and the impact of Britain’s lack of saving culture could be lessened” said Samir El-Alami of PensionCalculator.org a leading pensions and annuities website.