An Ipsos MORI survey conducted on behalf of the department also shows that 78% of Britons welcome the fact that employers are legally required to commit to auto-enrolment. Earlier this month, separate research indicated that four million people have been placed in workplace pension schemes since auto-enrolment was officially launched in the autumn of 2012. The auto-enrolment programme ultimately aims to ensure that all employers are providing their staff members with occupational pension schemes. It automatically places qualifying individuals in workplace schemes, forcing them to actively opt out if they do not want to make retirement savings. All of the country’s employers will be required to offer pension provisions under the terms of the programme by the year 2018. Pointing to a possible shift in people’s attitudes, nearly half of those questioned for the DWP survey said they regard the process of pension saving as being normal. Steve Webb, the UK’s Pensions Minister, said some “fantastic” findings have emerged from the study. But he added: “We still have a mountain to climb. Recent DWP research found that close to half of working-age people are failing to save enough to maintain their standard of living into old age, so there is more to do.” Mr Webb said the Government and employers need to be “evangelical” when it comes to raising awareness of auto-enrolment. According to the Coalition, the DWP’s We’re All In advertising scheme has encouraged three in 10 people to take action by focusing on the importance of pension saving.
Lessons to learn from overseas DC models
29 August 2014
Many people look to the US and Australia as models of DC best practice. However, are we right to follow their lead when it comes to auto-enrolment?
We are grateful to Professional Adviser for sharing this briefing from Helen Morrissey:
The flexibilities announced in the Budget have been largely welcomed by the industry. It is expected that retirees will remain invested for longer and will annuitise later, if at all. Many have pointed to the experiences of other big DC markets such as the US and Australia -both markets where annuities play no real part - as something to emulate. However, almost six months on from Osborne's announcements concerns have been raised as to whether the UK is going down the right path amid concerns that many retirees could run out of money. In addition, we have seen calls in the Australian market to introduce compulsory annuitisation. Interim findings of the Financial System Inquiry - a government commissioned investigation into Australia's financial system - found the retirement phase of Australia's superannuation system to be ‘underdeveloped' and ‘does not meet the risk management needs of many retirees'. According to the inquiry a quarter of people with a superannuation balance at age 55 have depleted their balance by age 70. The inquiry committee is now consulting on a range of options - including mandating the use of certain sorts of retirement income products and providing incentives to encourage retirees to purchase retirement income products that help manage longevity and other risks. Jeremy Cooper, head of retirement income at Australia's leading annuity provider, Challenger believes the Australian decumulation market needs more work if it is to work more effectively: "We have an excellent accumulation policy with people growing decent sized pension pots: we just need to work on decumulation model as it currently works like a bank account with the balance to be drawn down," he says. "They are designed to be depleted. Is this really a satisfactory state of affairs?" However, far from it being a problem, Tor Financial managing director David Harris believes it often makes sense for those with small superannuation balances to draw down their funds as the Australian state system is heavily means tested. "If you have a pension pot then your
CIPP Policy News Journal
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