By Marcus Leach
The radical reform of UK workplace pensions began today (Monday), as businesses throughout the country prepared to start enrolling workers into the new auto-enrolement scheme.
The aim is to ensure that low and middle earners are provided with an addition to the state pension, although it will take six years for all businesses to comply with the changes. Larger businesses will be the first to automatically enrol certain members of staff into the scheme.
"We are proud to be introducing this truly historic change, which will radically alter the way we save for our old age, and see millions more people putting something aside for the future," Steve Webb, Minister for Pensions, said.
"From October, we will start seeing large firms, such as banks and big supermarkets, automatically enrolling their staff into a workplace pension. Between now and 2018, more and more employers will come on stream - right down to the smallest ones.
"If we can get between 6 and 9 million more people saving in a pension by the time all employers are in, that’s a genuine savings revolution."
It is estimated that by the end of the year, around 600,000 more people in the UK will be saving into a workplace pension and by May 2014 about 4.3 million people will be saving for their old age.
The Confederation of British Industry (CBI) believe that the message from businesses is very clear, they are fully in support of the changes.
“The 1st of October is a new dawn for pension savers, with millions more workers being helped to save towards a pension with a contribution from their boss," John Cridland, CBI Director-General, said.
"The message from business is: “we’re in”. Firms are committed to helping staff achieve a good income in retirement, and the hope is that auto-enrolment will encourage employees to think long-term about their finances to achieve this goal.
“Boosting pension savings will help us look after our increasing number of elderly people and tackle the ticking retirement time-bomb.”
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