One of the UK's biggest actuarial firms, Watson Wyatt, has warned that the number of employees choosing to opt out of the new system of personal accounts, due to be launched in 2012, will be higher than previously thought.
Watson Wyatt canvassed a group of pension experts as to what will happen when personal accounts are introduced. Most experts felt that up to one in five employees could choose to opt out of the system, which would see them automatically set aside a percentage of their income into a pension fund.
Employee contributions would be supplemented by money from their employer and tax relief from the government. Employees will be "auto-enrolled", meaning that they will become members of the scheme without taking any action, and will have to actively opt out if they do not wish to join.
When personal accounts were first proposed in 2004, it was reckoned that fewer than one in 10 employees would opt out. If large numbers don't take part, however, it will mean a substantial proportion of the UK workforce will continue to have no pensions savings, outside what the state offers them.Reuse content