Tags: UK | Companies | Provide | Pension | Plan

UK Companies Must Provide Pension Plan for Employees

Wednesday, 27 Oct 2010 08:12 AM

Pensions Minister Steve Webb said businesses will have to enroll employees automatically in a pension plan from 2012, as part of the government’s bid to close the gap in Britain’s provision for old age.

The earnings threshold above which staff will be enrolled automatically will be aligned with the starting rate for payment of income tax, currently around 7,500 pounds ($11,900). There will be an optional “waiting period” of as much as three months before a worker needs to be automatically enrolled. Workers may opt in during the waiting period.

The government estimates around 7 million people in the U.K. are not saving enough for retirement. An independent review of pension arrangements, accepted by Webb today, proposed that companies that do not have a plan and choose not to set up one for themselves should have to subscribe to one overseen by a trustee body, the National Employment Savings Trust.

“The recommendations of the review team are a sensible and balanced package of proposals,” Webb told lawmakers in a written statement in London today. “In particular, the changes in scope and the deregulatory measures proposed will ensure the introduction of automatic enrollment is stable and proportionate.”

Seasonal Workers

The British Chambers of Commerce welcomed the 12-week exemption. It means companies with a high turnover of staff or a large number of seasonal workers “will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue, ” Adam Marshall, policy director at the business lobby group, said an e-mailed statement. “Employment agencies, which will be very important in the fight against unemployment and underemployment in the years ahead, will benefit hugely from this change.”

The Trades Union Congress, which represents 6.2 million workers, said there is “good and bad” in the new pensions arrangements, saying auto-enrolment is an “historic advance” for workers.

“But we are concerned at the increase in the threshold for auto-enrolment and the three-month waiting period,” TUC General Secretary Brendan Barber said in an e-mailed statement. “The main losers from this increase will be part-time women workers, the least likely group in the workforce to have a pension.”

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Pensions Minister Steve Webb said businesses will have to enroll employees automatically in a pension plan from 2012, as part of the government s bid to close the gap in Britain s provision for old age. The earnings threshold above which staff will be enrolled...
UK,Companies,Provide,Pension,Plan
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2010-12-27
Wednesday, 27 Oct 2010 08:12 AM
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