British workplace pensions should be compulsory - Policy Exchange

LONDON Wed Jan 22, 2014 1:56pm GMT

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LONDON (Reuters) - Britain should make workplace pension schemes compulsory to prevent millions of people living out their retirements in poverty, according to research by an influential think tank.

The report, published on Wednesday by right-leaning Policy Exchange, urged the government to scrap workers' right to opt out of workplace pension schemes.

Britain introduced automatic enrolment of workers into their employers' pension plans in 2012, hoping to boost savings rates, but stopped short of making it compulsory.

The think tank said saving for retirement should be seen as an obligation, and people were not saving enough under the current system.

"With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education," said James Barty, author of the report.

Policy Exchange warned that 40 per cent of working Britons - 11 million people - were in danger of not building up big enough pension pots to ensure a comfortable old age.

Under the think tank's proposed "Help to Save" scheme, pension contributions would also increase automatically with pay rises until a rate of 12 percent of earnings was reached, up from the current 8 percent contribution rate.

Of those retiring in 2013, the report said one in seven would be relying entirely on the state pension, while one in five would live below the poverty line.

(Reporting By Jemima Kelly; Editing by Andrew Heavens)

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Comments (1)
MrBeck wrote:
Remind me, what is not compulsory about “National Insurance”? I seem to remember when I retired the government was very interested in my contributions to NI regarding what my state pension would be. Since that appears to be one compulsory pension plan in place now is there a good reason to establish a second? Would the government like to dump all of the compulsory NI money into the general fund, oops, they do that already. I say if they want to make the workplace pension compulsory then fine if they stop collecting NI.

Jan 22, 2014 11:30pm GMT  --  Report as abuse
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