Steve Webb writes… 2 Millionth Person auto enrolled into a workplace pension

Today, the latest figures for the number of people placed into a workplace pension have been announced, and I am delighted to say that the 2 millionth person has now been auto enrolled into a pension.

It is essential that workers are encouraged to save towards their retirement, if they wish to maintain a standard of living comparable to what they have grown accustomed to whilst earning a wage. In the year leading up to the start of the scheme, across the private sector, only one worker out of three had any pension at all from their job – and that proportion had been falling for years.

We have introduced the scheme at a modest level, so as not to place too heavy a burden on business, staging enrolment dates to allow smaller businesses longer to prepare. By 2017, 11 million people will have been enrolled into a workplace pension, the vast majority of them for the first time.

So far, the signs for those choosing to stay in their pension scheme are very encouraging. Fewer than 10% of people have chosen to opt out, and that number is lowest towards the younger end of the workforce, who are beginning to see the need to put money back towards their long term future.

There is still more to do, and we are working hard to ensure that those being enrolled benefit from a better pension, that gives them the best possible return on their investment. The government is currently consulting on introducing a cap on charges for people being entered into the auto enrolment scheme, to ensure that those who have not chosen their own scheme are not unfairly hit by high costs.

We have created NEST – the National Employment Savings Trust – to give especially those smaller employers a cost effective place to enrol their staff, reducing the administrative and financial burdens on them. Businesses are still free to pursue their own scheme should they wish, but we have ensured that NEST has a Public Service Obligation to serve any firm which wants to use it.

In addition, our reforms to create a ‘Single Tier’ pension system will provide a simple, clear foundation on which to build. This will mean everyone will know exactly what to expect from the state in their retirement, so that they can plan accordingly.

Of course, auto enrolment is just the start of encouraging people to save more towards their retirement – they will not be able to expect to retain a comfortable standard of living if they simply put in the statutory minimum. It is, however, a crucial first step in ensuring that pensions and planning for the future become second nature to anyone starting out in their careers. This is the kind of real impact Liberal Democrats are having in government, helping to build the stronger economy and fairer society we all aim to be a part of.

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2 Comments

  • Paul Pettinger 16th Dec '13 - 6:16pm

    I think you are doing amazing work with your brief and are giving the Party some of its proudest achievements in Government – thank you.

  • What I dislike about this ‘Stronger economy, fairer society’ line is it suggests that for the first part you draw from the political right and for the second from the left. Essentially a belief that right wing economic policies will make the economy stronger. The trouble is the right don’t get ‘fairness’. Well how about having the confidence to say that the right’s ideas on the economy have made it a dysfunctional mess in which we’re at the mery of global economic forces which our governments have been almost uniquely reluctant to protect us against? Is the party stuck in the early 80s, with a belief that right wing economics relieves us from the power of trade unions into a virtuous circle of growth? Having people been missing the last 30 years?

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