Automatic enrolment into workplace personal pensions gets approval from EC, experts and ministers

Experts and ministers have welcomed confirmation by the European Commission that automatic enrolment into workplace personal pensions will be allowed under EU law – but say more can be done to support employees.

Secretary of state for work and pensions James Purnell was joined by the National Association of Pensions Funds (NAPF) in commending the decision, following heavy lobbying by UK employers and pension providers.

“This announcement will extend the benefits of automatic enrolment to millions more people – giving them the means to save for their retirement for the first time,” said Purnell.

“This is welcome news for both employers and the pensions industry as a whole,” said Joanne Segars, NAPF chief executive. “This issue had been the elephant in the room for far too long and now it has been resolved, we can move forward.”

But Simon Fraser, investment firm Fidelity president, said all the work could be for nothing if other aspects of pensions are not clarified.

“There are still other parts of the new rules that may lead to employers altering their company pension schemes to disadvantage current employees,” said Fraser. “We should not lose momentum on other important issues such as means testing and costs.”

The Pensions Bill 2007 will now be amended to allow automatic enrolment into contract-based pension schemes from 2012. There were fears that EU rules would prevent employees being automatically enrolled into such schemes.

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