05 December 2007 – Millions more savers, billions more savings - Hain
Millions more people would benefit from a good workplace pension as a result of reforms in the Pensions Bill 2007, Secretary of State for Work and Pensions Peter Hain said today.
The Bill, introduced to Parliament today, would give all employees aged over 22, earning more than £5,000 a year, access to a good workplace pension with a minimum employer contribution for the first time.
Secretary of State for Work and Pensions, Peter Hain, said:
“Automatic enrolment and the introduction of a compulsory employer contribution would be a huge social change – resulting in millions more savers, and billions of pounds more being saved towards retirement.
“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 7m still aren’t saving enough. These reforms will help people to meet their aspirations for later life.
“Between six and nine million people will be newly saving in a workplace pension or saving more as a result of these reforms. This will transform the savings culture in the UK – boosting overall annual pension contributions by up to around £10bn by 2015.”
The Bill reforms build on the improvements to the State Pension System in the Pensions Act 2007. A simpler, more generous and more widely available State Pension will provide a solid foundation for people to plan and save for the future.
Thanks to the matching employer contribution and tax relief, at the default level someone contributing £1 of their take-home pay would get £2 going into their pension pot.
The Pensions Bill 2007 proposes:
- Automatic enrolment into a qualifying workplace scheme from 2012.
- The introduction of the new personal accounts scheme designed for those employers who do not currently run a pension scheme
- Executive powers for the Personal Accounts Delivery Authority, allowing the authority to design this scheme at arm’s length from Government.
- A role for the Pensions Regulator as the compliance body for these reforms, ensuring employers meet their new obligations.
- Further simplification to the Additional State Pension by consolidating the rights people have built up under Graduated Retirement Benefit, SERPs and State Second Pensions into a single cash sum.
- Measures to ease the burden of regulation on employers, including a reduction in the cap on revaluation of deferred pensions from 5 per cent to 2.5 per cent - for future accruals only.
Commenting on the deregulatory measures, Minister for Pensions Reform Mike O’Brien said:
“We want to encourage employers who provide Defined Benefit pension schemes while ensuring that members’ benefits are protected.
“There is no magic bullet solution but we believe that the reduction of the revaluation cap achieves a balance, saving employers around £250m a year on average in the longer term and helping to keep defined benefit schemes open for the benefit of workers.
“I want to send a clear message to employers with good DB schemes – we want you to continue.”
Notes to Editors
- The Bill proposes automatic enrolment for people earning more than around £5,000 into a qualifying workplace pension scheme or personal accounts. Workers would contribute a minimum of 4 per cent, employers a minimum of 3 per cent with around 1 per cent in tax relief from the Government.
- Copies of the Bill, the Impact Assessment (IA) and supporting documentation is available at www.dwp.gov.uk/pensionsreform.The Government has also responded today to the consultation on its proposals for easing the burden of regulation www.dwp.gov.uk/pensionsreform/deregulatory_review.asp .
- The Bill is likely to be committed to a Public Bill Committee for consideration after Second Reading. Public Bill Committees can receive written submissions of evidence from outside organisations and individuals regarding the substance of the Bill. Submissions should be sent to the Scrutiny Unit, House of Commons, 7 Millbank, London, SW1P 3JA, with the name of the Bill clearly marked. Submissions sent to the Department will not be accepted as evidence. Submissions Evidence will be accepted at any time that the Public Bill Committee is deliberating, but should ideally be sent by the time of the Bill’s Second Reading in order to inform the Committee’s proceedings, including any oral evidence sessions it decides to hold.
- Submissions should be sent to the House of Commons Scrutiny Unit, which can also give advice in submitting evidence. For further information, see http://www.parliament.uk/about_commons/scrutinyunit.cfm or contact the Scrutiny Unit on 020 7219 8383/8387/8370
Contact details are as follows:
E-mail: scrutiny@parliament.uk
By post: Charlotte Littleboy, Deputy Head (Legislation), Scrutiny Unit, 7 Millbank, London SW1P 3JA.
Press Office Media enquiries: Ben Lloyd 020 3267 5136, Lynn Eccles 020 3267 5141
Press office: 020 3 267 5144
Out of hours: 07659 108 883
Website: www.dwp.gov.uk