Ok, the schoolmaster’s
hat is going back on again, bit of a lecture this one. We’ve touched on all
sorts of technical details of auto-enrolment so far, but why are we doing this
in the first place?
The first
reason is that the State pension is up the swanny (note: technical term). We
have an ageing population who, thanks to
medical science, just refuse to die off gracefully.
There are simply not enough young people to support the rapidly
expanding over 65 population at the moment, so expect to see some changes to
how the State Pension operates in the coming decade.
Presently,
those receiving the Basic State Pension get roughly £5,700 per year, which is
below the poverty line of £6566* - not ideal. So we can either raise taxes to
increase the state pension or get people to pay in to a personal / company
pension scheme. The Labour government of the time chose the latter option and
enshrined it in the Pensions Act 2008. So now we have what was originally
called pensions compulsion, now called auto-enrolment.
We’re
actually behind many other countries around the world in implementing this. New
Zealand has the Kiwisaver and Australia has a range of Superannuation schemes –
even Chile is further along in its auto-enrolment provisions than we are!
Rob
Barksfield
Auto-enrolment
Consultant
Telephone:
+44 (0)20 7893 3972
Email: contactus [@] broadstoneltd.co.uk
*Monitoring
poverty and social exclusion 2013, Joseph Rowntree Foundation
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