Workers at large companies will now be automatically enrolled into workplace pension schemes unless they choose to opt out. Their employers will be responsible for enrolling them into the National Employment Savings Trust or another suitable scheme.
The changes came into effect for large companies on 1st October. Employees at smaller companies will be enrolled over the next five years.
Employees who earn more than £8,105 per year will be eligible for the scheme.Their employers will also have to contribute. The pension reform was welcomed by workers, with only 11% planning to opt out.
Pensions Minister Steve Webb said: “All workers deserve a decent income in retirement, and far too many are missing out at the moment, particularly those on low to moderate incomes who need them the most.”
But research by Edin
burgh based investment firm, Scottish Widows, showed that 52% of workers displayed an ‘alarming lack of awareness’ of the upcoming changes.
Lynne Graves, of the Scottish Widows’ Corporate Pensions team, said: “Auto enrolment is designed for people who traditionally don’t have access to a workplace pension scheme, such as smaller employers or those with lower incomes, and it is clear that information is still not reaching the audience it’s intended to target. Educating these employees needs to be a top priority for the industry and the Government.”
Of the employees who know about the scheme, only 16% were made aware of it through their employers.
Please contact us if you would like more information about pensions and planning for retirement.
