Summary
This Report from the House of Commons Work and Pensions
Committee
‘Personal
Accounts’ (HC 220-I) looks at Government proposals for pensions and
savings.
In light of current estimates that around seven million people
are currently undersaving for retirement, the Government published a White
Paper
‘Personal
Accounts: A new way to save’ (Cm 6975) in December 2006. The White Paper
set out proposals to reform the private pensions system and promote a new
pensions saving culture.
The 2006 White Paper sought to
introduce a new scheme of personal accounts to provide access for people on
moderate to low incomes to affordable and trusted, low-cost pension saving.
All eligible employees would be automatically enrolled in either a
personal account or an employer-sponsored scheme, with a new national minimum
employer contribution of three per cent and tax relief equivalent to one per
cent.
In this Report, ‘Personal
Accounts’ (HC 220-I), the Committee welcomes the proposals for a new
system of personal accounts.
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How does it
affect me?
If you work in the financial sector or are one of the seven
million people are currently undersaving for retirement, this affects you.
The Committee makes a number of recommendations designed to ensure the
system is as simple as possible for employers and employees and operates
effectively, including:
- Using the PAYE system to collect
contributions
- The level of choice of funds available and the adequacy
of provision of financial advice.
It also highlights the need for
people to be encouraged to start saving for retirement immediately and not put
it off until the scheme is established in 2012, in order to avoid the risk of
creating a generation of non-savers.
See the Department for Work and
Pensions (DWP) Pensions
Reform blog.
See a list of
open DWP
consultations.
