Encouraging response to pension Personal Accounts

by Gill Montia

Story link: Encouraging response to pension Personal Accounts

Legal & General (L&G) has published the results of a survey into attitudes to the Government’s plan to introduce “personal accounts” to enable people to make better provision for a pension in old age.

Legislation to introduce the accounts is set to become effective in 2012 and L&G has reported an encouraging level of interest in the scheme.

The accounts will be operated on an “opt-out” basis, so that workers not in occupational pension schemes will be enrolled, unless they make the decision to opt out.

Staff will pay 4% of their salaries into the accounts and employers 3%. The Government will contribute 1% in tax relief.

According to the L&G survey, almost 50% of the adult population will choose to remain in the scheme.

Of those questioned, support for “personal accounts” was strongest among groups least likely to have made substantial pension contributions; 54% of respondents aged between 16 and 24 said they would choose to opt in.

According to Des Hamilton, technical director at The Pensions Advisory Service, the new measures will not provide a complete pension solution and “The big challenge for ‘personal accounts’ is getting across the message that this is just the beginning, just a foot in the door.”

At present, millions of people aren’t saving enough for their retirement and Ministers believe that the new scheme could boost annual pension savings by up to £8 billion.