Radical pension reform moved a step closer to fruition yesterday as the Government presented its plans to Parliament yesterday.
"These landmark reforms, on a scale unprecedented anywhere in the world, will ensure millions of workers on low and moderate incomes will be able to save for their retirement with a guaranteed new minimum contribution from their employer, many for the first time," said Pensions Minister Angela Eagle.
The changes kick off in Olympic year 2012. Large businesses with 120,000+ employees will be affected first. They will be expected to pay employer contributions of 1% of each employee's salary into a pension scheme.
Smaller businesses will then be phased into the scheme over three years through to 2016, with start-up small business given additional time to comply.
As the scheme establishes itself, the Government will also phase in increased employer contributions. For example, large businesses who start making 1% contributions from the get-go in October 2012, will be expected to make 2% contributions from October 2016, and then 3% contributions from 2017.
Work and Pensions Secretary Yvette Cooper calls this the most radical change to workplace entitlements since introduction of the National Minimum Wage. "Even during these difficult economic times, employers, industry and unions agreed with us that these reforms were vital in giving millions of people the chance to save in a pension for the first time," she said.
"We have responded to the concerns of business to make the introduction of these reforms as straightforward as possible. And start-up businesses will be given valuable extra time to prepare for these changes as we come out of recession.
"The cost to all of us of doing nothing in the face of an ageing society is too great to ignore. Currently 14 million people get no contribution from their employer towards a pension and around 7 million people are not saving enough for their retirement."
And Angela Eagle stressed: "It is essential we get the foundations right and continue to focus on minimising any process burdens on business. With the publication of the regulations today, we take a big step closer to automatic enrolment from 2012, moving from consulting with employers into a phase where we explain in clear and simple terms what their obligations will be."
"Along with our changes to the State Pension from April, we will ensure pensions are fair and sustainable in the longer term," she added.
** Additional information & advice **
Learn more about workplace pension reform on the Department for Work and Pensions website.
If you own a business, however, you may also want to speak with a solicitor to obtain expert advice. You can be matched with a solicitor in your area for free via solicitor matching services, which can also help you understand the best course of action for your situation and whether you are ready to hire a solicitor.