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Wednesday 26 September 2012

Auto-enrolment scheme 'will not be suitable for everyone'

The incoming auto-enrolment scheme has been praised for raising the awareness of having a pension pot in place for retirement.

Dr Ros Altmann, director-general of Saga, acknowledged that the strategy "is a good policy to try to get people saving and reinvigorate the savings culture in this country".

However, the business expert stopped short of totally praising how the government is approaching auto-enrolment.

She explained: "My fear is that, by enrolling people only into one product - the locked box pension - the policy will fail to provide good outcomes for too many."

To detail her concerns, Dr Altmann pointed out that some members of staff will be better off having an ISA than a pension.

On top of this, there will be a huge number of people eligible for the scheme who are still paying off their student loan or saving for their first home, and will not be keen to see a chunk of their income going into a pension.

"If we fail to reform state benefits, then people should be warned that the pension may not be suitable for them," Dr Altmann concluded.

The auto-enrolment scheme is introduced on October 1st, with the largest firms in the UK initially taking part.

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Posted by Richard Esquilant

Via: Salespeak News

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