Reinvigorating Occupational Pensions: Workplace Retirement Income Commission Publishes Final Report

What? The Workplace Retirement Income Commission (the "Commission"), established to help the Government meet its commitment to "reinvigorate occupational pensions", has published its final report.

So what? Recognising the need for a shift from a society that "spends today and pays tomorrow" to one which saves for the long term, the report contains 16 recommendations designed to encourage retirement saving and restore trust and confidence in the UK pensions system.

The Commission's recommendations

State pensions

1. The Commission welcomes proposals for a simpler, single-tier state pension and urges the Government to move quickly to put in place these new arrangements.

   Adequacy

2. From October 2012, new requirements will be introduced, which will mean that employers are required to automatically enrol eligible employees into a pension scheme that meets certain minimum standards. As part of this, employers will be required to ensure that a minimum contribution of 8 per cent is paid into the scheme on behalf of eligible employees (this must include an employer contribution of at least 3 per cent). However, the Commission believes that this minimum contribution will not be sufficient to meet expectations in retirement.

3. Ahead of 2017, the Commission urges the Government to work with employers and the pensions industry to develop and encourage approaches that make it easier for people to save more, such as "auto-escalation" (an approach used in the US, which sees...