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Friends wants 12% auto-enrol minimum payment

Friends Life head of corporate benefits Martin Palmer says the 8 per cent minimum contribution under auto-enrolment should be increased to about 12 per cent.

From 2012, firms will be required to enrol workers into pensions, with employees contributing 4 per cent, employers 3 per cent and the state 1 per cent. Workers will be able to opt out.

Speaking at the Labour conference in Liverpool last week, Palmer (pictured) said when economic conditions make it feasible, contribution levels will need to be increased to about 12 per cent. He said: “Auto-enrolment is coming at a time when people are effectively suffering real salary reductions, so it will be difficult for many to pay pension contributions but 8 per cent is not enough for a really good pension.”

He said asking people to commit to adding 1 or 2 per cent of wage increases to their pension contributions is a good way to boost the amount people save.

Speaking to Money Marketing at the conference, Shadow pensions minister Rachel Reeves (pictured) said 8 per cent is a good start. She said: “When people see their pot start to build they will start taking an interest in the money, how it is working for them, what sort of income they want in retirement and whether 8 per cent is enough to achieve that.”

Hargreaves Lansdown head of pensions research Tom McPhail said: “Even 12 per cent is at the bottom of what is acceptable, ideally, you want contributions of around 14 or 15 per cent.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Is that the contribution level required for Friends to make a profit out of employee benefits?

  2. NEWS NEWS
    Friends Life is desperate for new business
    READ ALL ABOUT IT

  3. screaming point 7th October 2011 at 9:27 am

    Good to see Friends Life are attracting the best minds in the financial world. Why stop at 12%, 20% would be better and after all, there’s plenty of spare money washing about.

  4. So, let me get this right – I need to pay off my credit/sore card debts, increase my pension contributions and continue to spend at my current level in order to help the recovery of the economy?

    Hmmmmmm

  5. And Kevin, your employer has cut your pay to budget for the cost of Nest. It is a fact that some employers have frozen pay to pay for Nest when otherwise a pay rise would have been offered.

  6. Clearly an employee in a FS scheme and not an employer … 12% on top of NI and Tax and recession … even the wife says stupid ..

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