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Monday, 15 October 2012
With all the media interest around party conference season, one of the most historic changes to pensions in this country has passed many people by. Automatic enrolment is the biggest change in pensions for at least a hundred years.
Starting with the largest firms in October, employers will now for the first time ever be required by law to pay into a workplace pension for staff who do not opt out.
By the end of this year alone around 600,000 more people in the UK will be saving into a workplace pension. By May 2014 an extra 4.3 million people will be saving for their old age. That is a remarkable step and something I am very proud to see this Government put in place.
Currently, around 11 million people are not saving enough to achieve the pension income they are likely to want in retirement, and less than 1 in 3 adults are contributing to a pension, while people are on average living longer - in the past 25 years, life expectancy at age 65 has increased by 5 years for men and 3 years for women.
Evidence from the Department for Work and Pensions suggests that, once automatically enrolled, less than one-third of people will take the active decision to opt-out. In the United States, case studies show automatic enrolment dramatically increased membership of similar schemes among new employees.
This will be one of this Government's longest lasting legacies.