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Govt seeks wider pension access

05/12/2007

Legislation which would see employers forced to make compulsory pension contributions for the first time has begun its passage through parliament.

The pensions bill, which received its first reading in the House of Commons today, would require employers to make a minimum contribution to workplace pensions for all those aged over 22 and earning £5,000 or more a year.

It is estimated the bill will help six to nine million more workers start saving towards their retirement. The government believes seven million people are not doing enough at present.

Work and pensions secretary Peter Hain said he hoped the legislation would promote a savings culture in the UK.

"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," Mr Hain said.

"These reforms will help people to meet their aspirations for later life."

The pensions bill would see automatic qualification for enrolment in a workplace pension scheme from 2012 and see the creation of a new personal accounts scheme.

It also proposes a reduction in the regulatory burden on employers, a role for the pensions regulator and the establishment of a Personal Accounts Delivery Authority running at arm's length from the Department for Work and Pensions (DWP).

"Automatic enrolment and the introduction of a compulsory employer contribution would be a huge social change - resulting in millions more savers, and billions of pounds more being saved towards retirement," Mr Hain added.