Workers will benefit from new Pensions Bill

Margaret Ritchie, the Social Development Minister, has said many workers will benefit from a workplace pension as a result of reforms proposed today.

The Pensions (No. 2) Bill will provide all employees aged between 22 and the State Pension age who earn more than £5,035 (in 2006/07 earnings terms) a year with automatic access to a workplace pension, with a minimum employer contribution for the first time.

Speaking after the Second Stage of the Bill, the Social Development Minister said: “Automatic enrolment and a compulsory employer contribution would be a major social change – resulting in more people saving more for retirement and transforming our saving culture.

“We all welcome the fact that people are living longer, healthier lives. However, if they do not plan and save for retirement, many could find themselves with significantly less income in retirement than they expect or wish to have. At present, around 48% of the Northern Ireland workforce has no provision for private pensions. These reforms will help people to meet their aspirations for later life.

“The reforms build on the recommendations of the independent Pensions Commission and are designed to avoid a pensions crisis in the future when people of working age would struggle to support the ageing population.”

The Bill represents the second stage in a comprehensive reform of pension provision in Northern Ireland and Great Britain. The first stage, a fairer and more generous State Pension system, was implemented by the Pensions Act (Northern Ireland) 2008 and will provide a solid foundation for planning and saving for retirement.

The minister said: “ Employers are critical to the success of the proposed reforms and minimising the burden on them has been a key principle in the development of the proposals.

“ I also want employers who already provide good quality occupational pension schemes to continue to do so.

“ The Bill contains a number of measures designed to minimise regulatory and cost burdens on employers. ”

Notes to Editors:

•  The Pensions (No. 2) Bill proposes:

1. Automatic enrolment into a qualifying workplace scheme for people aged from 22 to the State Pension age, earning more than £5,035 (in 2006/07 earnings terms) a year from 2012.
2. The introduction of the Personal Accounts scheme for employers who do not currently run a pension scheme.
3. Powers to enable the Personal Accounts Delivery Authority to oversee the introduction of the scheme.
4. A role for the Pensions Regulator as the compliance body for the reforms, ensuring employers meet their new obligations.
5. Further simplification of the State Pension system.
6. Measures to ease the regulatory burden on employers.
7. Jobholders will make contributions amounting to 4% of earnings over £5,035 but not more than £33,540. There will be a minimum employer contribution of 3% and 1% from the State in the form of tax relief.
8. 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.

•  News Media enquiries to the DSD Press Office on 028 9082 9456; out of hours contact the Executive Information Service Duty Press Officer 07699715440.