Paying into private pension schemes be they personal or company schems is currently not a legal requirement in this country. However, as we all know the Government have a serious problem in this country with the fact that we are an ageing population and in just a few years there will not be enough people working and paying taxes and national insurance contributions to cover the ever increasing numbers of people that have retired and are receiving their State pension benefits.
With this problem in mind the Government introduced new style low charging Stakeholder pensions just over 12 months ago.
Debate - The debate is now on as to whether the Government will make it compulsory for people to pay into these schemes and whether the Government will force employers to also pay ito such a scheme on behalf of an employee.It is something of a political "hot potato" and, when questioned, Government Officials shy way from a meaningful response. Perhaps they should give you the public some credit for knowing that you have to save for retirement.
The Virgin survey found that more than 77% of the public believed that having compulsory pension contributions to plan for retirement was a good idea. We believe it is also, although we still maintain our view that it is financial education and not forcing people to save that should be the long goal of both the regulator and Government.
Creating a comulsory environment where people have to pay into a pension scheme no matter what will only have the desired effect that it did in Australia. That is people just reduced their savings element elsewhere to redirect monies into Stakeholder type pensions. This then did not increase the overall average amount saved by an Australian it merely changed where money was being saved.
Education first, compulsion second. For more on Stakeholder Pensions visit the Stakeholder Cafe.com.