Ritchie reform extends pensions to all workers

Workers on low and moderate incomes, who do not have access to a good pension scheme, will benefit from new legislation, passed today.

Social Development Minister Margaret Ritchie MLA today ensured that The Pensions (No 2) Bill completed its passage through the Assembly. It is expected to receive Royal Assent shortly.

From 2012, workers will either be automatically enrolled into their employer’s workplace pension scheme or entered into the new Personal Accounts scheme, ensuring that people who in the past have not had the opportunity to build up savings for retirement will be able to do so.

Under the reforms, individuals’ minimum contributions will be matched pound for pound by a minimum employer contribution and tax relief, providing a strong incentive to save.

Speaking after Final Stage of the Pensions (No 2) Bill in the Assembly, Social Development Minister Margaret Ritchie said: “Private pensions are not just for the well off. This reform is good news for people on low to moderate incomes. It will enable and encourage more people to save more for their retirement. People are living longer and have higher expectations from their retirement. This reform will help avoid future generations of pensioners facing disappointment in retirement, or placing unsustainable financial burdens on the working population.

“This is an important Bill which will transform our saving culture, giving many people the opportunity to build up a private retirement income to supplement their State Pension entitlement.”

The reforms build on the recommendations of the independent Pensions Commission.

Notes to Editors:

1. From 2012, people aged from 22 to State Pension age, earning more than £5,035 (in 2006/07 earnings terms) a year will be automatically enrolled into a qualifying workplace scheme - Personal Accounts will be one option.
2. The Personal Accounts Delivery Authority is empowered to oversee the introduction of the Personal Accounts scheme.
3. The Pensions Regulator is established as the compliance body for the reforms, ensuring employers meet their new obligations.
4. The State Pension system is further simplified.
5. Measures are introduced to ease the regulatory burden on employers.
6. Jobholders will make contributions amounting to 4 per cent of earnings over £5,035 but not more than £33,540. There will be a minimum employer contribution of 3 per cent and 1 per cent from the State in the form of tax relief.
7. Jobholders may opt-out if they do not wish to save. Persons aged between 16 and 22, and State Pension age and 75, may opt-in to their employer’s scheme and receive contributions on eligible earnings.
8. The Bill contains a number of other measures, for example; the introduction of a proportionate compliance regime for the new employer duties, measures to strengthen existing workplace pension provision and further simplification of the State Second system.
9. The reform of private pension provision complements the State Pension reforms introduced by the Pensions Act (Northern Ireland) 2008 and, together, will provide a pension system fit for the twenty-first century.
10. News Media enquiries to the DSD Press Office on 028 9082 9456; out of hours contact the Executive Information Service Duty Press Officer 07699 715440.