Government pension scheme arrangement to increase cost for private sector
A number of pension related companies have this week come out with various comments regarding the forthcoming "auto-enrollment" pension scheme with a consensus that the additional cost of implementing this scheme, to be borne by the private sector, will lead to reduced pension contributions from sponsoring companies. The scheme will come into play between 2012 and 2017 whereby workers will be automatically enrolled in company pension schemes.
Under the terms of the arrangement, companies will initially only have to pay 1% of workers earnings as a contribution to the scheme although this will rise to 3% by 2017. Individual employees will need to contribute 4% of their salary to their company pension scheme with the UK government topping up the overall premiums with a 1% contribution. As a consequence, the additional cost taken on board to introduce the scheme between 2012 and 2017 will effectively be paid for by funds "set aside" for pension premiums.
This short-term reduction in employer pension fund contributions will obviously impact millions of workers in the UK although the long-term benefits are there for all to see, with more employees guaranteed some kind of income in later years.
Share this..
Related stories
How will you cope in retirement?
As the UK population continues to live longer there is a growing need to reassess and restructure the UK pension system and assistance for those in retirement. As we have seen over the last few weeks, more and more final salary pension schemes are closing to new members and indeed many are transferring to money purchase schemes with significant bonuses for members who agree to the move. In some ca...
Read MoreIs Pension Regulation Red Tape Killing Final Salary Schemes?
News that the government is going to be adding a new layer of regulations and rules with regards to final salary pension schemes has provoked a furious response for the CBI who's membership are growing tired of continuous meddling in the sector. The new raft of regulations will tighten the funding which needs to be in place and place a straight jacket around the funds in question, very much restr...
Read MoreWhat is a Pension?
To many people pensions seem like a particularly complicated financial product. In reality though, pensions are far from complicated, and everyone should understand their pension and the type of scheme they are paying into.
The sole aim of a pension is to provide you with a regular income when you retire. People who have worked in the UK and have paid 30 years or more National Insuranc...
Read MoreSIPP restrictions
There are some restrictions designed solely to prevent abuse of the Self-Invested Personal Pension (SIPP). Any SIPP holding prohibited assets directly or indirectly will have all tax advantages removed, which will broadly mean that it is at least no more advantageous to hold such assets in a pension scheme than it is to hold them personally. Prohibited assets include direct or indirect investm...
Read MoreAge concern loses pension row with European courts
The charity Age Concern has lost a court case against the UK government with regards to forced retirement at 65 years of age. The charity believes this is age discrimination and brought an action against the UK government through the European Courts. However, the charity was dealt a partial blow when the EU decided that UK employers can still force employees to retire at 65 years of age although t...
Read More