Every worker aged 18 years and starts saving in a workplace pension, unless they opt-out, that the government’s plans to expand its automatic registration scheme.
Currently, the regulation means is that employers must enrol employees aged 22 and more, and earn over Â£10,000 in a pension.
The Ministers hope that the reduction of the minimum age to 18 in the mid-2020s, and to say it is people on about 900.000 boys.
The system has been credited with the warranty, more preparation for the age, but it brings with it additional costs for employers.
It has been since October 2012.
“For a whole generation of people, place of work, pension saving is the new normal. My mission now is to ensure that the next generation of younger workers have the same opportunities,” said the work and pensions Secretary David Gauke.
What is automatic registration?
Unless you are already logged in to a workplace pension, a piece of worker-pay packet is automatically diverted to a pension pot that is invested, until retirement. Your employer makes a contribution, as well as the government.
Individuals have the opportunity to opt-out if you want to, though, which is the employer contribution mean.
Who work on a short-term contract, where an Agency pays your wages, or on maternity, adoption or care in consideration.
The total minimum contribution is currently 2% of income (of 0.8% from workers, 1% from the employer and 0.2% as tax relief by the government).
From April 2018, the increase to 5% of income (2.4% of the workers, 2% by the employer and 0.6% as a tax-legal protection). By April 2019, an increase to 8% of revenue (4% of the individual, 3% employer and 1% tax relief).
To expand the plan the entry ages are lower, a review follows on the automatic enrolment system.
Those with an income of less than Â£10,000 you can ask the sign up to your employer.
Iona Bain, the founder of Young Money blog, said the move was sufficient in the solution of a long-term pension crisis for the young.
“Many young people still do not know what a pension is. The danger is that people are sleepwalking into pensions and not under control. In the past this was a recipe for disappointed expectations,” she said.
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She said that the school-leavers, which should be in front of a “storm of financial pressures” to wear the same National wage as persons aged 25 and older, when they were expected to be in a pension.
The movement require legislation, so the proposed further changes to the system, including:
The contributions calculated as a proportion of all income up to Â£45,000 (the threshold of the higher tax rate) rather than the current system that calculates, as a part of the profits between Â£5,876 and Â£45,000. This will help those with multiple jobs
The annual reviews the trigger point for the automatic login (to the time when a worker earned Â£10,000 or more). Contribution levels will also be checked
To promote the exploration of the use of technology to save the UK’s 4.8 million self-employed people for retirement
The proposals to cost employers an additional Â£1.4 bn in the year, and the government an additional Â£600m in tax relief in the year.
To wear ” which the employer from the first pound of gain, then it means that by 2019, hundreds of thousands of small employers have to pay up to Â£180 and more per employee per year,” said Mike cherry, national Chairman of the Federation of Small businesses.
“For employers in particular sectors such as care and hospitality, where the margins are tight, these are really add up.”
More than nine million people in the UK have been automatically enrolled into a pension so far, in addition to the 10.8 million people already contributing to a workplace pension.
However, the share of the result is to move, is much lower than before 2012.
The average share of revenues into an investment-based defined contribution pension declined by about 9% of the income before the auto-log to 4% today.
The DWP’s report, led by representatives of the industry, estimates that 12 million people not saving enough for retirement, representing 38% of the population in the working age.
State pension age calculator DWP
How much will I get from a State pension? DWP
How much can I earn from a DC pot? Money Advice Service