Pension Reform Research Paper

One of the most significant challenges for social policymakers today is societal ageing. For many European countries, it is predicted that soon there will be fewer people in employment and more people that have reached pensions age and are due to retire. (Bridgen and Meyer, 2007) The UK system of pensioners support that exists today is a complicated subject and has a broad history of transformations and reforms over the past decades.

Each stage of pension transformation included an application of new rules and introduction of legislation that were designed to improve existing methods of pension calculations to benefit people in older age.

HISTORY OF PENSION

According to the Institute for Fiscal Studies (2010), first state pension in the

Plans of the most recent pension reform were announced in the Pensions Act 2008, where ‘automatic enrolment’ into a private pension was first proposed. A transition into a new system began in 2010 with automatic enrolment into employer pension schemes starting from 2012.

By initiating auto-enrolment pension reform, the government wanted to make sure that everyone will have sufficient amount of money to look after themselves once they retire. The way they have decided to go about this is by auto-enrolling everyone into a pension scheme. Means that, when you retire, you will get both the State Pension (that you contribute towards through National Insurance contributions) and your pension pot that you now contribute towards

Pension contributions of employees signed up to auto-enrolment will be boosted by the taxman and their employers. Pension consultants agree that if you start contributing to your pension early, it will be possible to build up a weighty pension pot by the time you reach retirement age. For example, the person with average earnings of £26,000 per year will have their pension pots boosted by £6,000 over ten years and over 40 years of working life will result in a total addition to pension savings of £24,000. As earlier, you will be auto-enrolled into a pension as better. For example, NEST indicate that if someone who earns £20,600 per year will be enrolled into a pension at the age of 22 can expect to build a pension pot of £148,000 by the age of 68. This means, that once they retire, they can get around £9,100 a year in addition to a basic state pension. At the same time workers are not involved in setting up a pension account and its administration as all these aspects of managing pension accounts will be down to the employer and pension provider. Employees just need to make sure that they continuously make their contributions if they want to benefit from the scheme later in life. Workers have access to pension account 24/7, and they can review and maintain it online at any time. It is easy to transfer your pension pot from one