The Pensions Bill received its first reading in Parliament yesterday and proposes automatic enrolment into a qualifying workplace scheme from 2012.
The Bill would give all employees aged over 22, earning over £5,000 a year, access to a good workplace pension with a minimum employer contribution for the first time.
Peter Hain, secretary of state for work and pensions, said: “Automatic enrolment and the introduction of a compulsory employer contribution would be a huge social change – resulting in millions more savers and billions more pounds being saved towards retirement.
“It’s good news that people are living longer, healthier lives, but unless people plan and save they could find themselves with less income in retirement than they’d want. Around seven million still aren’t saving enough. These reforms will help people to meet their aspirations for later life,” he added.
The Pensions Bill 2007 proposals:
- Automatic enrolment into a qualifying workplace scheme from 2012.
- The introduction of the new personal accounts scheme designed for those employers who do not currently run a pension scheme.
- Executive powers for the Personal Accounts Delivery Authority, allowing the authority to design this scheme at arm’s length from government.
- A role for the Pensions Regulator as the compliance body for these reforms, ensuring employers meet their new obligations.
- Further simplification to the Additional State Pension by consolidating the rights people have built up under Graduated Retirement Benefit, State Earnings Related Pensions Scheme and the State Second Pensions into a single cash sum.
- Measures to ease the burden of regulation on employers, including a reduction in the cap on revaluation of deferred pensions from 5% to 2.5% – for future accruals only.