Auto-enrolment 'will boost retirement saving'

News Article - Monday, May 19, 2008

filed under: Regulatory

Automatic enrolment into insurance-based workplace pensions will substantially benefit millions of savers, according to the government.

Work and pensions secretary James Purnell has announced that, from 2012 the benefit of automatic enrolment will be extended to insurance-based workplace pensions.

"There are currently 4.7 million people who work for a company with a Workplace Personal Pension and are not members," he explained. "This announcement will extend the benefits of automatic enrolment to millions more people - giving them the means to save for their retirement for the first time."

Ministers are planning to amend the Pensions Bill 2007 to allow automatic enrolment into workplace personal pensions (WPPs), having received confirmation last week that the move is in line with European consumer protection directives.

Under the terms of the bill, employees can already be automatically enrolled in trust-based pension schemes.

An estimated £6.7 billion is currently saved into WPPs each year by around three million employees, making it the second largest form of private sector pension membership in Britain. The UK currently has an estimated pensions black hole amounting to billions of pounds.

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