The future will be here sooner than you think …

Photo by Fabian Blank on Unsplash

I often say to my students that it’s never too early to start saving for retirement. This sage advice usually causes some hilarity amongst a group of individuals who, typically, are still in their late teens.

The UK Parliament passed the Pensions Act 2008 which, eventually, would compel employers to enrol their qualifying employees in a recognised occupational pensions scheme.

Historically, many employees might work for an employer without paying into a proper occupational pension scheme. This meant that, when people retired, they were almost entirely dependent on the state pension (a not particularly generous welfare state benefit). The spectre of pension poverty became a worrying concern for many.

People who worked in the public sector (e.g. civil servants, teachers, lecturers, NHS employees) were often encouraged to join superannuation (pensions) schemes which the State had set up. Individuals working in the private sector might not be so lucky: when approaching their late 30s or early 40s, they might start to think about private pension arrangements. To their shock and horror, these individuals might be faced with the prohibitive costs of setting up a private pension. Had they be encouraged to do this in their late teens or early 20s, they would have paid a lot less towards the cost of their retirement (and a more secure financial future in their old age).

The ageing society

So, for some time now, we have been faced with the reality of an ageing population in the UK. The Government has raised the state pension age to 66 which means that many people will be working for much longer than their parents. There are plans to raise the state pension age to 67 between 2026 and 2028.

The written statement of the main terms of employment – which every employee must receive within 8 weeks of commencing work – must now contain information about an occupational pensions scheme (as per Section 1 of the Employment Rights Act 1996).

From this April (2019), changes to occupational pensions schemes will mean that qualifying employees must contribute more towards their retirement (up from 3 to 5%), but employers must also pay more towards the scheme. For employers, setting up an occupational pensions scheme is a legal duty – even if you employ one qualifying individual only. Employees who earn less than £10,000 per year are not automatically enrolled in an occupational pension scheme.

A link to an article about the imminent changes to occupational pensions can be found below:

Ten million people face higher pension payments

Photo by Fancycrave on Unsplash

A bigger chunk of wages will now be automatically diverted to a pension, but employers will put in more too.

A link to the UK Government’s pension regulator website providing more information on pensions for employees and employers can be found below:

Copyright Seán J Crossan, 6 April 2019

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A legal blog by the author of Introductory Scots Law: Theory & Practice (3rd Edition: 2017; Hodder Gibson) Sean J. Crossan BA (Hons), LLB (Hons), MSc, TQFE I have been teaching law in Higher and Further Education for nearly 25 years. I also worked as an employment law consultant in a Glasgow law firm for over a decade. I am also a trade union representative and continue to make full use of my legal background. I am a graduate and postgraduate of the Universities of Dundee, London and Strathclyde. Please note that this Blog provides a general commentary about issues in Scots Law. It is not intended as a substitute for in-depth legal advice. If you have a specific legal problem, you should always consult a suitably qualified Scottish solicitor who will be able to provide you with the support that you require.

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