Personal accounts: "What are they?"
David Woods, 26 November 2008
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Only one in 10 employers believe personal accounts will come into effect as planned in 2012.
According to a report from JLT Benefit Solutions, 74% of employees have no idea about the retirement saving plan and only 27% of their employers are positive about the proposed scheme.
From 2012, the Government ruled employees will be auto-enrolled into a personal account to save for their retirement. The scheme will operate in a similar way to a defined contribution pension scheme. Employees will contribute 4% of their salary to the scheme, employers will contribute 3% and staff will receive a further 1% through Government tax relief.
But JLT shows two out of 10 employers are unsure how they feel about personal accounts and only 22% are positive about the new scheme. And only 10% think they will go ahead as currently planned.
More than a third (34%) of employers do not currently offer a pension and those who are most likely to be affected by the new scheme think their staff will opt out, when in reality only 29% of staff said they would. But only 13% of employees think they understand the future pension arrangement.
Duncan Howorth, chief executive at JLT UK Employee Benefits Group, said: "The general lack of awareness by employers and employees is in itself worrying but the fact employers have incorrect views on employee opinions and employees don't even know how they will be affected is very concerning."
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