It is vital that we think about our future. Such tough economic times, together with the fact that we are living longer and therefore encountering higher care costs in our old age, have highlighted the need for more people to proactively save for their retirement. I welcome, therefore, the Government’s introduction of an auto-enrolment pension scheme to ensure that people are better equipped to save for their future.
This innovative scheme, which came into effect earlier this month, will for the first time automatically enrol people into a pension scheme by introducing new requirements on employers to sign-up their employees into a pension scheme. Employers and employees will both pay into the scheme, with employees also getting some money back from the Government through pension tax relief which means that they will not be taxed on the money they pay towards their pension. Under the new scheme, it is estimated that up to 11 million workers will be automatically enrolled into a workplace pension and that the reforms will result in 6-9 million workers newly saving or saving more.
This reform in workplace pensions is required because people in the UK are living much longer than they used to and life expectancy is also continuing to rise. The Department for Work & Pensions has found that half of the working population does not make adequate provision for their retirement and so many are having to work longer. Indeed, since 2003 there has been a considerable decline in the number of eligible workers participating in a workplace pension from 12.6 million to 11 million.
The auto-enrolment scheme is a much needed initiative to dramatically boost the number of people saving for their pensions and to offset a culture whereby some people have spent their income extravagantly throughout their working lives and then needed to rely on the taxpayer to bail them out in later life. There are currently four working people for every one dependent in the economy but this number is projected to halve by 2050 which, with the proportion of over 85s expected to double by 2030, highlights the case urgent and far-reaching reforms in our pensions sector.
Crawley is leading the way in this pensions revolution, with one of the largest pension fund schemes, The People’s Pension, being run by B&CE which is based in Manor Royal. I would encourage local residents to explore joining The People’s Pension scheme on which further information can be found at www. thepeoplespension.co.uk/.
I am proud that this Government has introduced the auto-enrolment scheme nationwide and is taking the initiative in making sure that we are looked after in our retirement.