Iain Duncan Smith and Steve Webb have outlined the steps they plan to take to ‘fundamentally reform and repair’ Britain’s pension system and confirmed that its plans will be underpinned by automatic enrolment into workplace pensions from 2012.
An independent review of how to make auto-enrolment work will take place by 30 September 2010.
Steve Charlton, senior consultant at Mercer, said: "A new Government was never going to sweep away a flagship programme designed to increase pensions saving - too high a proportion of the population find it difficult to access provision for retirement. Automatic enrolment into workplace pension schemes is a logical method of addressing this."
The scope of the review appears not to be looking at the when and why, but more at the who and how. This includes consideration of the size of firm to which auto-enrolment will apply.
Carlton said: "While the finer details could change, the main principles of the auto-enrolment regulations are unlikely to. Large and medium-sized employers should have sufficient information to be working on their own implementation plans, as the Coalition Government has expressed its commitment to the 2012 implementation date.
"Even employers that only need to auto-enrol a small number of employees will find that the new process is significantly different from current pensions practice. Complying with the new duties is not simply a case of paying the right contribution or enrolling on the right date; it will require considerable planning and analysis of the potential impact on wider remuneration costs."
Michael Rendell, head of human resource services at PricewaterhouseCoopers added: "If people anticipate working into their old age, they may choose to take longer breaks earlier in their careers, perhaps to concentrate on family life or to travel overseas. Ultimately companies are going to have to adapt to retain talented people and keep them motivated throughout a longer working life."
