The government has announced details of a new savings scheme to provide all employees with the right to a workplace pension with a contribution from their employer.
It follows an Attitudes to Pensions report, which showed that 84% of respondents supported the idea of a national pension savings scheme, while three-quarters were in favour of automatic enrolment, particularly if there was an employer contribution.
Despite an awareness of the need to save for retirement, one-third of respondents have never contributed to a private pension, while three in 10 put spending today over saving for tomorrow.
A quarter of people surveyed said they knew “little or nothing” about pensions.
The government announced that ‘personal accounts’ would be launched as an occupational pensions scheme managed by a board of trustees. It is a response to a White Paper consultation on savings published in December 2006.
It said that it would set an annual contribution limit of £3,600, in 2005 earnings terms, which would rise, linked to earnings, year on year.
Secretary of state for work and pensions John Hutton, said: “We know that people are far more likely to save for their retirement if they have access to a simple, low-cost pension with a contribution from their employer. That is exactly what personal accounts will provide.”
James Purnell, minister for pension reform, said: “We believe setting a cap at this level will allow personal accounts to remain focused on our target group of moderate to low earners who currently do not have access to a good pension.
“It is important that personal accounts complement rather than compete with existing high-quality pension provision,” he said.