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Employers unclear on personal accounts

Employers unclear on personal accounts

Category: Pensions

Updated: 05/08/2009
First Published: 05/08/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Government's plan to introduce personal accounts is unclear and is confusing employers, according to a new report.

Under current plans, employees who do not have access to a company pension will be automatically enrolled onto a scheme, which the Government hopes will release some of the burden put on the state.

Self employed workers will also be able to opt into the programme, which the Conservative party has pledged to uphold should it be voted into Government next year.

However, analysis by Friends Provident has found that only 13 per cent of employers are ready for personal accounts, with almost half (44 per cent) admitting to not knowing what effect it will have on existing pension arrangements.

The company has called for the process to be simplified before it is rolled out in 2012, asking that a system be put in place that is easy to administer and cost effective.

Current employer-sponsored provisions must be supported and not undermined if people are to take responsibility for their retirement savings, the firm said.

"As originally conceived, personal accounts are a good attempt to deal with the issue of encouraging people on low to medium incomes, or those in transient or self-employed, to save for retirement," said Martin Palmer, head of corporate pensions marketing.

"Currently only 25 per cent of people are saving enough for their retirement. We have time to make changes but it would be better to delay implementation and get it right, than stick to targets and be left with something that isn't going to work, and actually will make things worse."

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