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26 Nov 2012

Government Seeks To Improve Workplace Pensions

The UK Department for Work And Pensions last Thursday released a report called ‘Reinvigorating workplace pensions´, which lists measures designed to improve the workplace pensions system.

As part of the measures, the government is examining ways to ease the regulatory burden on employees with defined benefit (DB) schemes, whilst also protecting the scheme members´ benefits.

For defined contribution (DC) schemes, in which many people will be saving through auto-enrollment, the government is looking to increase the contribution level and ensure good investment strategies.

The government is also considering introducing a new type of scheme, called Defined Ambition, in which employers and employees will share any risk. The design of the new scheme will provide members with greater certainty about the final value of their pension savings as well as reduce the cost volatility for employers.

The measures are designed to boost the number of people saving into pensions as well as the amount that they receive at retirement in return for their savings. The government is also looking to encourage innovation and development of new products in the industry, while also increasing transparency and building trust and confidence in saving for a pension. Overall, the main objective is to ensure that the UK pension system is sustainable and stable.

The government pointed out that its reasons for the decision to invigorate the system were due to the ageing population in the UK and that people are not putting enough into pensions to ensure that they receive the retirement income they expect.

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