U.K.: Pensions Act Receives Royal Assent

. LONDON, England / Money.co.uk / November 27, 2008 By Peter Wakeford The new legislation makes Personal Accounts a reality under UK law. The Pensions Bill has become an Act of Parliament, after receiving Royal Assent from the Queen. Under the terms of the new legislation, the Personal Accounts system - an automatic-enrolment, government-backed pension scheme is scheduled to begin in 2012. The government introduced the system in the hope that it will boost retirement savings among the general public. All contributions to the scheme will be "matched" by a pre-set payment from the employer. However, all employees retain the option to "opt out" of having a Personal Account. In addition to the new system, the Pensions Act obliges all firms to provide some form of workplace pension provision for employees earning over £5,000 a year, giving a contribution of three percent of salary. These obligations will place an additional financial burden on many employers, experts have suggested. Speaking today, Andrew Tully, senior pensions policy manager at Standard Life, said that firms should seek out financial guidance on the matter as soon as possible. "This Act brings massive new responsibilities for employers," he commented. "It introduces compulsory pension provision by employers from 2012 which will see employer costs increase significantly. Early planning is essential to find the best way to mitigate these additional costs." Copyright © www.money.co.uk