Personal Accounts and changes to occupational pensions
The Pensions Bill currently going through Parliament would give all eligible workers between 22 years of age and State Pension age the opportunity to save in a pension with contributions from their employer. From 2012, it is planned that all eligible workers would be automatically enrolled into either a good quality workplace pension scheme or into the personal accounts scheme (unless they are already in such a scheme).
Automatic enrolment
Automatic enrolment means instead of choosing whether to join a workplace pension scheme provided by their employer, all eligible workers will have to actively decide not to be in a scheme, if for any reason they feel saving in a scheme isn’t right for them.
Personal Accounts
The Personal Accounts scheme will be a new, simple, low-cost pension saving scheme aimed at median to low income workers, who currently do not have access to an occupational pension scheme.
Minimum employer contribution
There will be a duty on employers to provide a workplace pension scheme or a personal account for their employees, and also to contribute a minimum of 3% (on a band of earnings) to employee’s pensions. This will sit alongside 4% from the employee (on the same band of earnings) and around 1% from the Government in the form of tax relief.
Find out more about these pension reforms on the Department for Work and Pensions website
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