The Government have said that the introduction of personal pension accounts will not reduce savings in occupational schemes. They have said that they will be working with employers to make sure that generous occupational schemes do not reduce their contributions to bring them into line with personal accounts, and that a review of occupational scheme regulation will look at ways of countering such an effect. The forthcoming personal accounts technical paper will contain details on how employers can auto-enrol staff in their own schemes as long as they are as generous as personal accounts. The Government is currently looking at proposals, which will allow employees to raise their contributions in line with wage increases, but they have ruled out incentives for graduates with student debt to auto-enrol.
Our view
People only have so much money to save. If they save in one area, they will not necessarily save more in another area. We believe that the Government is relying on what people do not have, they will not miss.