Millions could benefit from company pensions

Tue, 23 May 2006

Up to 12 million workers who are not currently saving for their pension plan could benefit from enrolment in a company pensions scheme, according to analysts.

Simon Fraser, president of institutional business at mutual fund management company Fidelity, has stated that enrolment in company pensions is a "very good step".

"Fidelity research has shown that approximately 12 million workers who are not currently saving anything towards retirement are set to benefit from auto-enrolment," said Mr Fraser.

"Workers whose employers contribute nothing – more typically those in stakeholder pensions – are on track for just 35 per cent of their expected final earnings, against an average of 51 per cent for those whose employers do contribute."

The government is expected to release its white paper this week, outlining new proposals for the state pension system, which is believed to contain plans for a national pension saving scheme (NPSS).

Along with the formation of the NPSS, a rise in the state pension age rise to 68 and the future restoration of a link to earnings, not inflation, are expected.

Any NPSS scheme would involve probably involve auto-enrolment, but have an opt-out clause for individuals who are enrolled in a company pension scheme.

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