The Government has set out a series of initiatives to increase pension saving, working in partnership with employers, individuals, the financial services industry, trade unions and the voluntary sector.

Andrew Smith, together with Pensions Minister, Malcolm Wicks, yesterday unveiled the publication: ‘Simplicity, security and choice: Informed choices for working and saving’. Read a summary of the document.

What are the key proposals?
The most substantial developments relate to the provision of more pension information to employees, including online retirement planners. The Government also suggested that employees should automatically join their company pension scheme unless they make a request in writing to opt out.

The Government said it plans to raise awareness and education by providing support and reforms to regulations to make it easier for firms to get on with promoting good schemes; and take powers to oblige firms that don’t offer their own pension to provide a decent standard of pensions information.

It also aims to work in partnership with employers to deliver 3 million combined pension forecasts by 2005/06 so more people can see the total income from state and company pensions schemes that they are on course for.

TUC’s view
The TUC believes that employees should only be encouraged to save if their employers are making a decent contribution as well. It said it would not support the proposal that employees alone should make compulsory contributions to stakeholder schemes.

The TUC is calling for a compulsory pensions system in which all employers would contribute 10% of pay, if necessary phased in through a strict timetable starting at 4%.

Mercer’s view
Dr Deborah Cooper, Senior Research Actuary at Mercer Human Resource Consulting, said: “A huge challenge is to make employers comfortable about discussing pension provision openly with employees without the fear of being accused of mis-selling if things go wrong. It would be a big step forward if the ABI and FSA could provide employers with clear guidance on how far they can safely go.”

She continued: “Employers could adopt a more strategic approach to employee education which could really make a difference.”

However, she warned: “Most schemes will enlist new members at the default contribution rate, which is often the lowest rate available. Employees could be doing themselves a disservice if they don’t consider their options and what is best for them.”

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