Automatic Pensions Enrolment Happening: Government
The government has confirmed that it will be going ahead with its plans for automatic pensions’ enrolment in order to boost savings in private pension schemes.
The government has released the details of the new move.
Pricewaterhouse Coopers has welcomed these proposals as a ‘common sense simplification’. The firm has said that with the new proposals, the burden on businesses has not increased while at the same time they have given employees the opportunity of enjoying a workplace pension.
By 2016, all businesses will have to enroll the bulk of their staff into pension’s schemes. The move will start from the biggest businesses that will have to do this in 2012 itself. Both the company and the worker will be required to contribute a combined minimum of 8% of earnings within broad bands.
The National Employee Savings Trust (NEST) is also expected to be established. It will be a national pensions saving scheme that will give employers a low cost scheme to work with if they don’t already have one.
Companies which already have a pension scheme present can also use this government scheme for some or all of their staff.
The government will be changing its rules which will allow employers to prove that their pension scheme is at least better than NEST.
Peter Woods, who is the pension’s partner at Pricewaterhouse Coopers, said: “One of the biggest improvements to the scheme is the government’s self-certification proposals, which will make it much easier for employers to continue using their existing pension schemes after 2012.”
Under the new scheme, employers will have the option of going for a 3 month waiting period before automatically enrolling an employee onto the scheme. This will give them the opportunity of not enrolling seasonal or temporary workers.