Workplace Pensions October 2012
October 2012 sees the dawn of automatic enrolment causing millions of workers from every industry across the country to start saving through workplace pension schemes, so they can secure a more prosperous retirement.
The government’s intention is to reverse the universal trend of a decline in workplace pension saving over the last fifteen years. Promoting automatic enrolment, the Pensions Minister Steve Webb, said: “Pensions are far too important to be the preserve of the few. 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.”
Up to 11 million people are expected to be eligible for automatic enrolment, with 6 to 9 million newly saving or saving more in all forms of workplace pension scheme. In 2011, around 13.5 million workers were not saving within any workplace pension scheme. Of these, 12.3 million were in the private sector and 1.2 million in the public sector.
Automatic enrolment, starting on 1st October 2012, will see people aged 22 to state pension age and earning over £8,105 a year, start to be enrolled into their employer’s pension scheme, beginning with the largest businesses first. All employers will be automatically enrolling their employees by April 2017.
DWP estimates of the decline in pension saving within the private sector, are derived from the Office of National Statistics (ONS) Annual Survey of Hours and Earnings (ASHE -1997 to 2011) and the DWP findings conclude that:
- the industries where workers are currently least likely to have a workplace pension are Construction with only 33 per cent of workers saving; the Distribution, Hotels and Restaurants sector (28 per cent), and Agriculture and Fishing (19 per cent).
- gas fitters, electricians and plumbers are among those who have been building up the most savings in any sector (66 per cent are saving), though numbers have declined with the Energy and Water sector showing the sharpest decline in saving, down 20 per cent over the past 15 years from 86 per cent.
- there has been a dramatic decline in the Distribution, Hotels and Restaurant industries since 1997, with pension saving down from 46 to 28 per cent and in the Banking, Finance and Insurance sector, saving is down from 58 to 44 per cent.
- pension saving has fallen across all age groups, but it is steepest among those aged 22-29, falling from 43 per cent in 1997 to 24 per cent today.
- both men and women are saving less, although pension saving has fallen further for men – down from 59 to 44 per cent, and from 49 to 39 per cent for women.
Automatic enrolment is expected to reverse these trends and the Government expects that millions will get access to pension saving, many for the first time, within workplace schemes where everyone will get a contribution from their employer.
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