UK - Amicus, the UK's largest private sector union, has called for pension compulsion modelled on Australia's compulsory superannuation system as a solution to the UK pension crisis.
The union described a nationwide requirement for all employees and employers to contribute as “vital” to end the growing savings gap.
Under Australia’s system, employers must contribute 9% of salary, creating pension savings of AUS$566bn. The estimated pensions savings shortfall in the UK between the estimated required level of savings and the actual level of savings is £27bn.
Amicus wants a system in which 10% of salary is made through employer contributions and 5% employee contributions. The average employer contribution to a defined contribution scheme in the UK is about 6% with many making no contributions at all.
The union said Australia’s superannuation scheme was seen as “particularly effective” for the lower paid, with 20% of citizens in the lowest income bracket boasting an average superannuation fund equivalent to 83% of their net wealth.
The union also praised the government’s co-contribution scheme in which additional pension contributions are paid by the government for those earning less than a set upper salary bracket.
Derek Simpson, general secretary of Amicus, said: “We believe that legislation compelling employers and employees to make minimum pension contributions throughout their working lives is required to ensure that people save enough for their retirement and to protect pension schemes. This would also protect the position of good employers who offer good schemes and stop rogue employers closing viable schemes.”
A recent survey by Amicus revealed that 40% of the population had no pension provision. More than half of the final salary schemes once on offer have since been closed by employers to new members and replaced with defined contribution schemes and declining confidence in the industry has reduced the number of people saving for their retirement, the union added.
Adair Turner is set to come out with his second report on the UK pension industry, which will consider compulsion, in autumn.
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