When the concept of auto-enrolment was ann-ounced, I breathed a sigh of relief. For far too long, people have been delaying paying into a pension scheme, with serious consequences. This could be the push that is needed to help people to understand the importance of saving for later life.
The Pensions Act finally received Royal Assent early in November to get the process underway, and not a moment too soon.
The perception of pensions has been damaged and the recent turbulence in the stockmarket, for instance, has left pensioners with less money than they had expected for retirement which can lead to people putting less money aside, whether through a pension scheme or savings.
But whether companies offer their own choice of pension scheme or the National Employment Savings Trust, opting out would be the biggest mistake that a person could make.
This is a chance for people in the UK to start saving and receive a monthly contribution from their employer. Rather than something to be scorned or even anxious of, employees should embrace the opportunity to save and the extra money going into the pot.
Giving people the choice to opt out in today’s environment should be stopped. Although I appreciate people need to think about today, who is going to pay for tomorrow? Our country continues to recover from a financial crisis and part of its recovery has been to make cuts.
But for a small amount of money every month, the retirement life stage of a person can be significantly improved. To opt out when you are younger would be a false economy and one which can never be reversed.
Life expectancy continues to rise and as a result our money must last longer. Those who do not plan their finances will discover this as an unwelcome surprise further down the line.
Pensions are just one of the many factors that need to be considered when people plan their finances leading up to and during retirement. People are now being given the chance to get this sorted early and be given a sense of security by knowing they have some money set aside. Retirement should be an enjoyable time, without the stress of financial burdens. It is never too early to start paying into a pension – opt in or lose out.
Richard Collinson Chief executive and co-founder RetireEasy.co.uk