Additional employment cost - one to watch for the future
In a recent article by Mike O’Brien, the current Minister for Pensions Reform, on the Department for Work and Pensions’ website, some further details on the proposed changes to pensions in 2012 were outlined.
Essentially the Government’s view is that people are not saving enough for when they retire.
To tackle the problem of under-saving, from 2012, millions of people will be
be automatically enrolled into a pension scheme. Legislation to achieve this will be introduced in the next parliamentary session.
For the first time, employees will have a guaranteed contribution from their employer towards their pension. The employee will put in a minimum of four per cent of their salary, the employer a minimum of three per cent and around one per cent comes from the Government in tax relief. Ignoring all the personal and moral issues the bottom line seems to be – employers will have to find an extra 3% on top of existing payroll costs.
This is important – watch this space for further details.
