Government launches £11m auto-enrolment awareness campaign
The government yesterday launched an £11million publicity campaign aimed at informing employees about the coming overhaul of company pensions including the introduction of auto-enrolment.
The new laws on auto-enrolment will begin to kick into action from October this year, and by 2017 companies of every size will be obliged to enrol eligible job-holders in a suitable pension scheme. The changes will apply to larger companies first, leaving smaller companies more time to adjust budgets accordingly.
As part of the pension law changes employers will ultimately be required to offer those who are eligible contributions equivalent to 3% of pensionable earnings, with the government offering 1% as tax relief and employees contributing a further 4% to the pot.
The campaign was launched amid evidence of a continuing decline in pension saving, figures released last month by the Department of Work and Pensions suggest that just 11.6million out 30.4million workers are currently saving for retirment.
According to a recently released report by the consumer watchdog Which? just 40% of those aged between 35 and 44 were part of a pension scheme.
Although employees will have the option of opting out on their pension scheme, it is hoped that auto-enrolment and an obligation for employers to offer a pension contribution will encourage more saving.
Pensions Minister Steve Webb said:
"As we head into the final stretch before millions of people begin to be enrolled into a workplace pension, it is vital that we make sure that individuals and employers know what to expect.
"Auto-enrolment will transform this country, putting an end to the decline in pension saving, and setting millions on course for a more prosperous retirement."
Which? pensions expert, Ian Robinson, commented:
"Those who opt-out may be tempted to avoid making contributions but they could lose out in the long term. Pension saving in an employee scheme is a great way to save for later life. The employer contribution is like extra pay, and the government offers tax relief on top of this. For younger workers, auto-enrolment is particularly beneficial."
Visit our company pensions section for more information on auto-enrolment and changes to pension law.
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