Thursday, 20 September 2012

Over half a million more people saving in pensions

Latest figures show that more than half a million people will be saving in a workplace pension for the first time by Christmas.

This is thanks to the biggest shake-up in UK pensions for over a hundred years – automatic enrolment.

From October, starting with the largest employers, bosses will be required by law to pay into a workplace pension for all eligible staff who do not opt out.
The figures from the Department of Work and Pensions reveal that by the end of the year, around 600,000 more people will be saving into a workplace pension. By May 2015, around 4.3 million more people will be saving for their retirement.

Iain Duncan Smith, Secretary of State for Work and Pensions, said:
"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."

Up to 11 million people are expected to be eligible for automatic enrolment, with 6 to 9 million newly saving or saving more in all forms of workplace pension schemes.

Under automatic enrolment, employers will eventually contribute 3% of earnings, individuals 4% of earnings, and there will also be 1% of tax relief to make up a total contribution of 8%.
Employees are able to opt out of the change, but they will not receive this extra contribution from their employer or the tax relief, or be contributing to a workplace pension. They will be re-enrolled every three years and be given the same option.

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