Pensions Bill to launch Personal AccountsScheme aimed at those on low and medium incomes
07 November 2007
Employers will have a duty to pay money into a pension scheme for their staff under legislation announced by the government in the Queen's Speech.
The Pensions Bill will see the introduction of Personal Accounts, a low-cost pensions savings scheme aimed at those on low and medium incomes who are not currently saving towards their retirement.
The legislation will also enable workers to be automatically enrolled into qualifying company pension schemes and for employers to make mandatory contributions to them.
It is estimated that around seven million people are currently not paying enough money into a pension, particularly those on low and medium incomes.
Under Personal Accounts, which were set out in the government's Pensions White Paper in 2006, people who are not already members of a pension scheme will be automatically enrolled into Personal Accounts, although they will be able to opt out.
They will have to pay 4% of their salary into the scheme, with their employer contributing 3% and the government paying in 1%. The government has previously said it wants to introduce the accounts in 2012.
The Bill, which builds on changes to the state pension system introduced in the Pensions Act, also paves the way for an independent Delivery Authority to be given the power to say how Personal Accounts will be set up and run.
Last month the government said that a consumer representative committee would work with the Delivery Authority in setting up the scheme.
Which? is one of several consumer groups - including Citizens Advice, the Equalities and Human Rights Commission, Age Concern, the Financial Services Consumer Panel and the TUC - that have been asked to help set up the committee advising on the scheme.
© The Press Association, All Rights Reserved