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UK government renames pension initiative

The UK government made some amendments to the "Personal Accounts" pension system which has now been rebranded as the "National Employment Savings Trust" otherwise known as Nest. This is the government's initiative to try and head off the ever-growing and ever more critical pension crisis which is gripping the UK at the moment. This is a crisis that has been building for many years but which has now reached a pivotal point with many believing the UK government has left it too late to act.

Under the new reforms, workers aged between 22 and the traditional retirement age, and also earning in excess of £5000 a year, will have to be enrolled in a pension scheme by their employer, unless they have a better scheme available or opt out. Each employee will be obliged to pay 4% of their salary into their Nest account, employers 3% and the UK government 1%. This equates to 8% of the employees gross pay and will allow them to save for their retirement.

Even though the scheme will begin in 2011 it will not move to the automatic enrolment system until 2017 and there is bound to be some confusion and misinformation between these two dates. In principle the idea is excellent, as it will allow many people to save for their retirement, but in practice there are fears that not all employers will be able to fulfil their obligations.

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