Millions of people can look forward to greater financial security in retirement, as Government sets out its plans to introduce automatic enrolment into workplace pensions, following an independent review.
Minister of State for Pensions, Steve Webb said:
“Our reforms will ensure that millions of people will start to save for their retirement, many for the first time. I welcome the sensible and balanced proposals from the independent review team, which will help ensure automatic enrolment works. Building on the consensus for pension reform, NEST will play its part as we transform the savings culture in this country.”
The National Employment Savings Trust (NEST) will be the new low-cost pension scheme that will be the vehicle for saving for millions.
For the first time employers will have to make pension contributions for eligible workers from 2012, ending decades of decline of membership in workplace pension schemes. Between four and eight million people will start to build up savings or save more in a workplace pension – helping to ensure that people can enjoy the retirement they want.
The key changes to be implemented as a result of the review are:
- Aligning the earnings threshold at which an individual is automatically enrolled with the personal allowance for income tax;
- Introducing an optional waiting period of up to three months before a worker needs to be automatically enrolled, though workers may opt in during the waiting period;
- Simplifying the process for employers to certify that their money-purchase scheme meets requirements;
- Introducing further deregulatory measures to reduce burdens on employers.