New system of pension saving
Minister for Pensions Reform, Mike O’Brien, has announced that the Pensions Regulator will monitor a new system of pension saving.
The system will be designed to enrol employees automatically who are not able to join a good scheme run by their own employer. Employers, as well as staff, will have to make contributions, to improve the level of pension saving in the UK.
Those with an income of £5,000 and over will automatically be enrolled into a qualifying work based pension scheme or personal accounts, subject to Parliamentary approval of reforms to be published in the forthcoming Pensions Bill.
Mike O’Brien said he believes the Pensions Regulator is well-placed to perform this important new role. It currently does an excellent job protecting pension scheme members while also demonstrating sensitivity towards the needs of businesses.
Mr O’Brien added that by working with the Pensions Regulator, a simple, proportionate compliance regime which ensures employers meet their obligations without imposing any unnecessary burdens will be put in place.
The Pensions Regulator will be in charge of ensuring employer compliance with the new requirements. Furthermore, HM Revenue and Customs will have a key role in providing them with the information required to identify employers, forming the basis for employer registration to be undertaken by the Pensions Regulator.
It is expected that the new system will be operational from 2012.
Recently, Consultancy group Mercer, said that contribution levels to the majority of pension schemes are too low to provide a good income during retirement.
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