Minister urges acceptance of 'vital' pension reform
Hundreds of thousands of West workers have been urged to join a looming pensions revolution – or face the misery of poverty in retirement.
Pensions Minister Steve Webb said without taking action, many people will not be able to afford to stop working – or will face a big drop in their living standards if they do retire.
The Thornbury & Yate MP is leading a major awareness campaign for automatic enrolment for workplace pensions, which starts within days for Britain’s biggest firms.
This week has seen a massive advertising blitz including full-page features in key newspapers such as the Western Daily Press.
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There is also a TV advert with well-known bosses including stars of the BBC’s Dragons’ Den and The Apprentice, Theo Paphitis and Karren Brady.
They are highlighting the biggest change in pensions for over a century, the automatic enrolment programme that aims to get 11 million more people saving for their old age by 2018.
From October Britain’s biggest employers such as supermarkets and banks will start putting their staff into new workplace pensions, designed to guarantee a nest egg for their retirement.
It follows a disastrous slump in the numbers signed up to workplace pensions – including a fall of 105,000, in the private sector in the South West in only 14 years.
It means they face living on just the basic state pension – currently £5,587 a year – but staff can opt out of auto-enrolment, and up to one-third are expected to do so, when they find their take-home pay has dipped.
Mr Webb yesterday issued a stark warning that workers who drop out will be turning their backs on their last chance of preventing their retirement income “falling off a cliff”.
He told the Daily Press: “Without this, millions of people will get a shock when they retire – in poverty, if we’re not careful. They will either have to work much longer – because they won’t be able to afford to retire – or they will have a big slump in their living standards.
“We know, human nature being what it is, that people will put it off, they’ll find it baffling or daunting – they just won’t sort it out for themselves. We are taking all the hassle away.”
Everyone between 22 and state pension age and earning more than £8,105 will be enrolled in a scheme, although it will not apply to the smallest firms until 2015.
Workers will contribute one per cent of their pay packet at first, rising to four per cent by October 2018, with the employer putting in three per cent.