Thousands of people with jobs in London will now start paying into a company pension plan, as the government’s auto-enrolment scheme gets underway, standard.co.uk writes.
Designed to ‘reverse the slump in retirement saving’, those that work in some of the city’s biggest companies will be automatically enrolled into a scheme and receive contributions from their employer, unless they opt out. To be eligible, they must be aged over 22 years and earn above £8,105 per annum.
Those working in medium-sized companies will be eligible from next spring and enrolment should be extended to all workers by 2018. Initially, employees will pay in just 0.8 per cent of their salary, to which is added 0.2 per cent of tax relief and one per cent from the employer. By 2018, this will rise to four per cent from the employee, one per cent in tax relief and three per cent from the employer.
The news is good for those starting a new job, as they will no longer have to endure waiting periods to join a scheme nor progress to a certain level before an employer pension contribution is due.
By the end of 2018, bbc.co.uk reports, it is hoped that between six and nine million people will be saving into a pension scheme, to provide a greater income for their retirement.