Member Article

Over a million to join auto-enrolment pension scheme

Workplace pension schemes are to be rolled out to around 600,000 people, the Department for Work and Pensions announced today.

Over half a million people are to be automatically enrolled onto the optional pension programme by Christmas, after it is implemented at the beginning of October.

The scheme hopes to have approximately 4.3 million more people saving for retirement by May 2015. The CBI reacted positively to the announcement, putting its support behind auto-enrolment.

Neil Carberry, CBI’s Director for Employment, said: “As the UK’s ageing population continues to increase, we need more people to start recognising the value of saving for retirement.

“Auto-enrolment will help rebuild a positive savings culture in the workplace and encourage people to take control of their retirement plans.

“It will help the country adapt to the happy challenge of rising lifespans gradually over time, and avoid a future pension funding crisis.”

The Secretary for Work and Pensions commented: “This is a vital reform and I’m proud the Coalition has made it a reality.

“Automatic enrolment will get up to 9 million more people saving into a workplace pension and for many it will be the first time they have had the opportunity to save.

“It will allow people to start planning for their retirement and this will make it easier for them to start putting something aside, along with a contribution from their employer.”

Employers will contribute 3% of earnings under the scheme, while individuals will pay 4% and there will be 1% of tax relief.

Currently, 11m people in the UK are not saving enough for retirement, and 22 to 29-year olds have shown severest falls in saving from 43% in 1997 to 24% in 2012.

More men than women have stopped saving for their pensions, although both groups are saving less, as the number of male savers fell from 59% to 44% and female savers dropped from 49% to 39%.

Steve Webb, the Minister for Pensions, said the step was a major milestone and will be the most significant boost for pension in over 100 years.

He said: “By the time all employers are included, millions more people will be saving for their old age, with over half a million new savers in workplace pensions by Christmas.

This was posted in Bdaily's Members' News section by Miranda Dobson .