Department proposes national pension scheme to encourage employee enrolment

Upon automatic enrolment, a minimum of 8% of earnings within a band would be contributed to the pension, with at least 3% coming from the employer.

This policy is designed to maximise private pension saving by individuals without imposing compulsion. The right to opt out will remain.

Key issues raised:

• Should staff earning below a particular threshold or above or below a certain age be excluded?
• Should small-scale companies be excluded from additional responsibilities implied by the policy?
• Would any changes to the proposed regulations, implementation and details surrounding automatic enrolment enhance the policy?
• Is NEST necessary for automatic enrolment to be successfully put forward?
• Could changes to the rules surrounding NEST enhance automatic enrolment?

DWP recommends that there should be no changes to age thresholds and automatic enrolment duties should apply to all employers, regardless of size, as now. Employers should be given three months before auto-enrolment to ease the burden on companies. If staff choose to enrol before the three month period then companies will have to make contributions.

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