Company Pensions could be Compulsory for Staff

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Company Pensions could be Compulsory for Staff

By Phillip Inman, The Guardian

February 4, 2004

New employees could be forced to join company pension schemes under government proposals announced yesterday.

Ministers said employees would automatically become members of a company scheme in a pilot project designed to reduce the number of workers relying solely on the state pension. Participants will have to opt out of the scheme rather than opt in, as under current rules.

Another pilot scheme will ask employees to "commit potential future earnings" to their pension savings and a third will allow them to decide whether to join a scheme.

The Department for Work and Pensions said it was exploring a range of options to get people to save more for their retirement, including an active retirement planner which aims to give people a clear idea of their income in retirement from state and private provision.

It will allow people to see projections of their retirement income and the options enabling them to increase it, such as raising their contributions or retiring a few years later.

Work and pensions minister Andrew Smith said: "The state of your pension should be as important as the state of your health. We want to provide people with the tools to make informed decisions about their future.

"Government must help provide people with trustworthy, individually tailored information simply explaining their situation and the options available to them."

Plans to tell employees they must opt in to company schemes were welcomed by the insurance industry, trade unions and employer groups, which said many workers were failing to save for retirement.

But the TUC said the government must also compel employers to make contributions before pressing ahead with a full-scale compulsory pension scheme.

Other critics of the government's handling of the pensions crisis said ministers had put together a list of proposals rather than concrete plans to boost pensions savings.

Liberal Democrat pensions spokesman Steve Webb said: "The government is failing to grasp the urgency of the pensions crisis and twiddling its thumbs while pensions burn."

David Willetts, shadow pensions minister, said he supported forcing employees to opt in to a company pension scheme, but criticised the new means-tested pension credit.