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Pension reforms ‘must be bolder’

Pension reforms ‘must be bolder’

Category: Pensions

Updated: 10/05/2011
First Published: 03/05/2011

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 It is now over 6 months old so the content may be out of date.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 new auto-enrolment pension scheme has been criticised for not being bold enough.

It is hoped that the National Employment Savings Trust (NEST) will breathe new life into occupational pensions, as employees not offered a workplace pension scheme will be automatically enrolled.

The scheme will be phased in from next year with the aim of being fully rolled out by 2016 and helping two million employees make regular contributions towards their pension pots.

But while welcoming the objectives of the initiative, the Association of Consulting Actuaries (ACA) has said that the current make-up of NEST will not provide people with an adequate level of retirement income.

It said that 'bolder policies' would be needed if a culture of saving was to be implemented.

Under auto-enrolment, employees and employers will be able to jointly contribute a minimum of 8% of a worker's salary into a pension fund.

This level has already been criticised as being too low, and ACA has added its voice to the debate.

ACA's chairman, Stuart Southall, has called for tax incentives to be offered to employers that offer their employees quality pension schemes which 'would be set at a far higher level than the total 8% contribution which will apply when NEST reaches full maturity'.

The organisation has also urged the Government to help build a savings culture in the UK by introducing financial education into schools.

"Linked in with this is the need to change the culture of society from one of living for today and spending everything earned to a more balanced one in which saving and long term financial planning have greater prominence," added Mr Southall.

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