Pension industry supports auto-enrolment
The proposed plan for auto-enrolment into company pension schemes is a "very positive step" and will benefit millions of people, claims an investment provider.
The National Pension Savings Scheme (NPSS) will see employees automatically enrolled if they are not already in a sufficiently-backed company scheme, approximately 12 million workers according to Fidelity International.
Employees would contribute four per cent of their salary, employers would add three per cent and the government would contribute one per cent but workers would have the right to opt out if they wished.
Fidelity revealed that a recent retirement index highlighted the importance of employer contributions for such schemes.
"Workers whose employers contribute nothing – more typically those in stakeholder pensions - are on track for just 35 per cent of their expected final earnings, against an average of 51 per cent for those whose employers do contribute," said Simon Fraser from Fidelity International.
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