Press Association

United Kingdom

December 5, 2007

The Government is setting out plans for all workers to be automatically enrolled into a pension scheme.

The Pensions Bill, which will receive its first reading in Parliament, will see people automatically join their company pension scheme, although they will still be able to opt out.

It will also make it mandatory for employers to pay the equivalent of at least 3% of their staff's pay into a pension.

The Bill will also pave the way for the introduction of new Personal Accounts, which are due to come in from 2012.

The accounts will be aimed at workers on low and medium incomes who do not have access to a company pension scheme.

Workers who are not members of an occupational pension will be automatically enrolled into them, although they will also be able to opt out.
They will contribute 4% of their pay with their company paying in 3% and the Government contributing 1%.

It is estimated that around seven million people are currently not paying enough money into a pension, particularly those on low and medium incomes.
The Pensions Policy Institute recently said the introduction of Personal Accounts could lead to an extra nine million people saving into a pension, with additional contributions of £10 billion a year being made.

The Bill will also introduce changes to the regulations surrounding so-called deferred benefits built up in defined benefit schemes, which includes final salary pensions, in a bid to encourage companies to keep them open. The bill builds on changes to the state pension system introduced in the Pensions Act.

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