Pension savings boosted by new plan

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Pension savings boosted by new plan

LONDON, UK - Under new proposals to be announced by the Government tomorrow, UK employees will automatically join their company pension schemes unless they make a request in writing to opt out.

Andrew Smith, Work and Pensions Secretary, is expected to unveil US inspired proposals towards compulsory pension saving after figures revealed that up to 10 million people are not saving to their full capacity.

A source at the Department for Work and Pensions (DWP) told The Times: “A lot of people ignore their existing pension scheme because it's a bit complicated, retirement's a bit far away and it's easier to stick their head in the sand, but we want it changed so that everyone joins the scheme unless they bother to tick 'no'.”

“We want people to think about pensions like they do about their health, with regular check-ups.”

Mr Smith is also expected to propose the introduction of ratcheted pension savings, as is common in America. Workers make small contributions toward their pension at the beginning of their career, with contributions increased inline with their age.

The Government is expected to pilot the plans immediately, as concern increases among actuaries about pension scheme deficits. A study by Aon Consulting, the pensions advisers, gave warning that increasing longevity will add at least £10 billion to the £55 billion pension shortfall that has hit FTSE 100 companies, according to a new pensions study.

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