Pensions
Future pensions provision has become a key issue in Government with an ageing population and most people not saving enough money for their retirement. The Government commissioned the Turner Report to examine the options available to increase saving and reform the pensions system to ensure that in the future most people will have saved adequately for their retirement.
In response to this report the Government has decided to introduce a system of ‘personal accounts’ for all employees, alongside changes to the State pension and increases in the retirement age.
Personal Accounts, which will be introduced from 2012, will see employees aged 22 and over pay in 4% contributions on a band of earnings from around £5,000 to £33,000. Employers will match this with 3% contributions while there will be 1% tax relief. Employees will have to be automatically enrolled into an account, although there will be the option of an ‘opt out’.
ACS is working closely with the Department for Work and Pensions (DWP) to highlight the impact that personal accounts will have, particularly in increased costs. It is crucial that personal accounts are as administratively ‘light’ as possible as complicated or time consuming administration will greatly increase costs.
ACS will continue to work with the DWP over the coming months as they and the Personal Accounts Delivery Authority, design how personal accounts will work and begin their implementation.