| Recent research from The Department for Work | | | | sectors such as retail where workers do not |
| and Pensions has shown that over half of | | | | already have pensions. |
| employers and workers support the plans for | | | | Still, the move marks an encouraging step |
| auto-enrollment to be introduced by 2012. The | | | | towards tackling Britain's lack of a saving culture. |
| scheme, through which workers will automatically | | | | There are presently approximately seven million |
| be enrolled in company pension schemes, aims | | | | workers who are not saving in a workplace |
| to secure a comfortable retirement for staff who | | | | pension scheme, and this lack of individual |
| at present aren't saving enough. | | | | retirement planning - coupled with an ever ageing |
| Under the new policy individuals will have to | | | | population - is what has prompted fears of a |
| contribute a minimum of 4% of their earnings, | | | | "pension timebomb". If some firms do reduce |
| while the minimum level for employers is set to | | | | their contribution to pension schemes as |
| be 1% as the scheme comes into place. The | | | | auto-enrollment is introduced, individuals will be |
| government will also top up the overall premiums | | | | forced to take more interest in retirement |
| at a rate of 1%. Workers will retain the right to | | | | planning. The recent news of plans to speed up |
| opt out of the scheme, though employers may | | | | the state pension age increase (to 66 by 2016, |
| be made to re-enroll those who do every three | | | | and 70 and beyond in future decades) serves as |
| years. | | | | an additional reminder that the onus is shifting |
| Though the employer contribution level is set to | | | | from the state to the individual to take |
| rise to 3% by 2017, there are concerns that the | | | | responsibility for their pensions. |
| initial 1% rate may encourage companies to drop | | | | Conceived by the previous Labour government, |
| existing levels in line with the minimum. Most | | | | the auto-enrollment scheme is a response to |
| employers who contribute into a staff pension | | | | increasing life expectancy rates and the |
| scheme at present pay around 6%. | | | | inadequacy of pension savings. While it will put in |
| There are other criticisms of the plans for | | | | place some kind of security for those workers |
| auto-enrollment. The additional cost of | | | | who before had nothing, its minimum contribution |
| implementing the scheme may be another | | | | levels may be far from what is needed to |
| incentive for companies to reduce benefits overall | | | | provide the desired lifestyle after retirement. |
| to meet expenses. A survey by the ACA | | | | Individuals will need to realise this, and not rely too |
| (Association of Consulting Actuaries) found that | | | | heavily on what will be put in place for them |
| almost half of employers were either 'likely' or | | | | automatically. Still, auto-enrollment is a positive |
| 'highly likely' to reduce pension schemes as the | | | | step towards the type of saving culture the UK |
| reforms are implemented. An ACA spokesman | | | | of today needs. |
| suggested this would be more likely to happen in | | | | |