Pensions, will you save the NEST egg?
The recent simplification of retirement proposals has been received with the general approval of the business community, but what will people do with the plans?
As of 2012, employees will be automatically credited to the scheme, which will require 4% of their salary. The tax benefits will provide an additional 1%, in addition to the contribution of your employer between 1% and 3%, depending on the time of payment.
Employees will receive necessary information about the NEST scheme, after which they will be able to choose if they want to stay in it or reject it. As with most standard pension plans, employees cannot access the money until the minimum age established by the state, currently 55 years.
It will be interesting to see how many people have abandoned the plan.
According to government forecasts, by the end of 2016, more than 2 million members will participate in it, earning between 15,000 and 30,000 pounds per year. It is said that this income scale is separate from the savings process. The question is, is it a separation, because they cannot afford to save, or because they do not trust financial institutions?
The government has already spent £ 363,000 to change the name of the “Personal Accounts” scheme to the “National Employment Fund.” If you are in this target income range and you are struggling to make ends meet, this is the kind of wasteful government spending. Will there be a free duck for the first 100 employees who will arrive?
Taking into account the fact that those who win the next election will see more tax increases, 4% is someone’s salary. On the other hand, perhaps the sadness of the very idea of retirement is enough to scare people into joining this plan.
Low-wage workers
Go to the website if you would like to believe that this plan will increase the number of low-wage workers everywhere, arguing that “even in these difficult economic times, employers, industry, and unions agreed with us that these reforms are vital to providing millions of people the opportunity to save during their first-time retirement, However, the introduction of NEST can lead to unintended consequences of the deterioration of the pension package offered to such employees. There is a danger that employers’ contributions of more than 3% will be rarer since employers only make a minimum.
And, in any case, at the current rate of change in pension legislation, who knows what the provisions will look like in 2019?