Government to Launch Personal Accounts Scheme

by Gill Montia

Story link: Government to Launch Personal Accounts Scheme

The Government is introducing new pension measures that will give all UK employees the right to a workplace pension with a contribution from their employer, in 2012.

Details of the Personal Accounts scheme have now been published whereby employee contributions will be matched £1 for £1 by a combination of contributions from their employer and the Government. To participate, employees will be required to contribute a minimum of 4% of their salary and the employer a minimum of 3%. An additional 1% will come from the Government in the form of tax relief. The introduction of Personal Accounts means that for the first time employees will have a right to a pension contribution from their employer.

Personal Accounts will operate as an occupational pension scheme and will be managed by a board of trustees, which will be advised by a members’ panel and an employers’ panel. The annual contribution limit of £3,600 will increase year on year. The contribution level reflects the Government’s intention to help moderate to low earners who currently do not have access to an adequate pension.

Between six to 10 million employees are expected to have taken up Personal Accounts by 2012 and the move has been strongly welcomed by the National Association of Pension Funds.