On 5 December 2007 a Bill entered Parliament to take forward measures aimed at encouraging greater private saving. Three key features of the Pensions Bill are as follows:
3% Employer Contribution
- For the first time all qualifying employers will be required to contribute a minimum of 3% (on a band of earnings) to an employee’s workplace pension scheme. This will supplement the 4% contribution from the employee and around 1% from the Government in the form of tax relief.
Personal Accounts Scheme -
From 2012 the Government plans to introduce a new low cost saving vehicle, the personal accounts scheme, aimed at employees who don’t have access to a good quality work based pension scheme - in the main, median to low earners.
- From 2012, the Government plans that all eligible workers, who are not already in a good quality workplace pension, will be automatically enrolled
into either a qualifying pension scheme or into the personal account pension scheme.
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.
For more information on the Pensions Bill visit the Pension Service's Frequently Asked Questions