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I just came across this while surfing t'internet. It may be old news for some. tinyurl.com/cvol59g
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Whilst it sounds good in theory i for one have reservations.
Its another huge direct cost for every directly employed person on the payroll, will lead to ever more belt tightening by companies and job losses....companies will be more tempted to replace permanent employees with temps of one sort or another.
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gb is on the right track IMO.
There's massive apathy towards pensions, in the currently active scheme I am involved with there are about 20,000 eligible employees of whom fewer than 20% are enrolled. This is a "money pot" scheme where the employer will put in double the employee's contribution, so for 5% less tax relief they can have 15% of salary paid into a fund.
Arguably some would be no better off for the sacrifice in pension terms if they are low paid - with annuity rates as they are they may not generate enough income to offset sufficiently the loss of pension credits/benefits when they retire, unless contributions are a high proportion of salary.
At some point in 2013 15,000 or so of these 20,000 employees are going to be defaulted in to the new auto-enrolled scheme, intitally at a low contribution level. Some will opt out - possibly quite a lot. But the employer's pension costs will rise significantly over a number of years, and it is distinctly possible in my view that the employer will reduce existing contribution rates. There is also a large deficit in the now closed final salary scheme which the employer is not currently in a position to fund.
The principle is good - get more people into schemes. But a lot of the people who are opted in will get negligible net benefit at some cost to themselves and the employer, with the benefit going to a reduction in the Treasury benefits bill (which might not be an entirely bad thing).
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Workplace pensions from October 2012 - -
