Govt sets out pension plans
The government today set out plans to get millions more Britons saving towards their retirement.
The pensions bill, which will see employees automatically enrolled on workplace pension schemes, was introduced in parliament today.
It is estimated the bill will mean six to nine million more workers are able to start saving or save more towards their retirement, going some way to combating the seven million people that are not putting sufficient sums away towards their retirement.
Introducing the bill, work and pensions secretary Peter Hain said it would help promote a savings culture in the UK.
It also marks the first time employers have been legally required to contribute towards their employees’ retirement.
Mr Hain said: “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.
“Around seven million still aren’t saving enough. These reforms will help people to meet their aspirations for later life.”
Under the plans, all employers over 22 per cent and earning more than £5,000 a year will be automatically enrolled into a savings scheme from 2012.
Employees will then contribute four per cent of their pay into their Personal Account, matched by three per cent from their employer and one per cent from the government.
The government today also set out changes to pension arrangements for existing pensioners.
Pensions minister Mike O’Brien confirmed the basic state pension will rise to £90.70 for a single person and £145.05 for a couple from next April, an increase of £3.40 and £5.45 respectively.
Mr O’Brien also set out measures to simplify the pension benefits system, with pensioners able to claim their state pension, pension credit, housing benefit and council tax benefit in one phone call.
These moves were welcomed by Help the Aged, which said it was “particularly pleased” the government is moving towards a more automatic payment of benefits.
Paul Cann, director of policy at Help the Aged, said: “Someone who claims pension credit over the phone will in future get council tax benefit and housing benefit as a matter of course, without the need to fill in any forms at all.
“We hopes this will represent the beginning of a process to really simplify the benefits maze for older people, but there is much more still to be done and the government must rise to the challenge.”
Despite Mr O’Brien’s claim to have lifted one million pensioners out of poverty, the Liberal Democrats today published figures claiming pensioners are now worse off than they were in the 1950s.
The Lib Dems calculate the typical pensioner received 18.4 per cent of the average wage in the 1950s, compared to 15.9 per cent today.
Pensions spokesman Danny Alexander said it was disgraceful pensioners could be getting less than they did under Margaret Thatcher, despite ten years of a Labour government.
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