UK - The government has announced radical new proposals to automatically enrol all new employees into their company pension schemes. An opt-out clause would come into place.
The new measures unveiled by Andrew Smith (pictured), Secretary of State for Work and Pensions are aimed at reducing the risk of people “under-providing” for their retirement.
In his report entitled Simplicity, security and choice: Informed choices for working and saving, Smith said that new employees will also be encouraged to make “active decisions” on whether or not to join a company’s scheme.
Smith explained: “The decisions people make about retirement are among the most important they face. We all get a lot of information on pensions, but too often we don’t understand how it relates to our own retirement prospects. Government must help provide people with trustworthy, individually-tailored information that simply explains their situation and the options available to them.”
The new proposals which have been drawn by Smith along with pensions minister Malcolm Wicks are aimed at empowering people to make real and informed choices on working and saving for retirement.
The plans also introduce an online retirement planner which will be used to give individuals a clear overall picture of their retirement prospects, based on personalised information about both their state pension and any private provision.
The planner will help individuals to find out how working longer or saving more can help any saving shortfall.
To raise levels of awareness and education, the government plans to provide support and reform regulations to make it easier for firms to get on with promoting good schemes and take powers to oblige firms that don’t offer their own pension to provide a decent standard of pensions information.
Minister for Pensions Malcolm Wicks said: “As we all know, we are living longer and this makes it more important than ever that people make the right decision to ensure they have the retirement they have dreamt of. Informed Choice will do this right across the workplace.”
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