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Do you want the government to force you to save?
A survey shows 46% of people want the government to help them save for retirement, but would compulsory saving be seen as another tax?
by Michelle McGagh on Apr 04, 2012 at 12:06
In six months the government will begin one of the biggest pension shake-ups ever to hit this country. It will start automatically enrolling employees into workplace pension schemes and forcing companies that have never had a workplace scheme to start one.
Once enrolled into the scheme, you don’t have to stay in: you can opt-out but have to do so every three years, although the government is banking on the inertia of the UK population to keep most people enrolled.
It’s great that people who weren’t before will now be saving for their retirement and benefiting from employer and government contributions to boot.
But does auto-enrolment go far enough? Research from insurer Friends Life shows that 61% of people are not confident in their own ability to save for their retirement without government or employer intervention, which suggests that auto-enrolment is long overdue.
It’s not just that people don’t feel they can afford to save and need the financial boost from their employer and the government; building a secure financial future is simply not a priority for many people.
The survey shows just 8% of people rate saving for retirement as their financial priority, and only 48% make regular contributions to a work-based pension. A staggering 19% of people don’t have a pension at all.
With so little importance accorded to financial security, there's a fear that people will opt out of the scheme. So does auto-enrolment go far enough? Should payment into a pension scheme be made compulsory?
According to the research, 46% of people said compulsory saving would be a helpful way to ensure they achieve a decent level of saving, but 24% said they would see it as an additional form of tax.
Whatever your views on it, we shouldn’t completely rule it out in the future. The UK’s finances are a mess, and people just aren’t saving enough to fund their retirement.
Who’s to say that by the time I come to retire (I’m 30 this year) there'll be a state pension at all? The chances are that my generation and others after will have to rely on our own savings in retirement.
How would you feel about being forced to save a percentage of your wages each month, and how much do you think you could spare?
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