Fixing the roof as the sun shines
PENSIONS are like fixing a leaking roof while the sun is shining.
But for nine million people they will find that work has already started to fix that roof when it comes to their pensions.
Since 2012 and the dawn of auto-enrolment, work-place pensions have ensured there is a minimum amount that employees have to save for their retirement.
Auto-enrolment has now increased from two per cent to five per cent, where the employer contributes two per cent of that five per cent total.
But will auto-enrolment change the savings culture within the UK so it is similar to that of some of our continental cousins, such as the Germans?
In the UK, all of the businesses subject to auto-enrolment have already done the hard work by setting up the relevant schemes and ensuring they are compliant.
There is no denying that businesses will feel the effect of the increase, but this is something they can plan for.
The real hope is that there needs to be a sea change in the savings culture so that people are more aware that they can no longer be reliant on the state pension to see them through their retirement years.
But the acid test will come next year when auto-enrolment will rise to eight per cent in April 2018.
Employers will pay three per cent of this, but the employees will be bearing the five per cent contribution.
So if employees continue to embrace this new era and decide to continue contributing and not opting out then I think we will have seen a cultural change to savings at long last.
Today I can already see that people’s expectations on life expectancy have changed and that given the strength of the silver pound, pensioners will not want to compromise on their expectations for holidays, leisure, and food.
Therefore, they need to make sure that their expectations can be sustained.
Workplace pensions go some way to achieve this. Colin Rodrigues is head of the Corporate Team at
Hawkins Hatton