Move to plug North pensions hole

The North's Social Development Minister moved today to plug a hole which sees almost one-in-two workers without a private pension.

Many employees in the North are to receive a workplace pension with an automatic contribution from employers from 2012.

All aged between 22 and state pension age earning more than £5,035 (€5,922) a year will benefit, minister Margaret Ritchie said.

Ms Ritchie said: “The proposals are intended to increase private pension savings and form part of a package designed to ensure that our pension system is fit for the 21st century.

“The Pensions (No.2) Bill aims to help people to save for retirement, to deliver greater fairness, greater simplicity, affordability and sustainability.

“Taking no action now could mean future pensioners facing disappointment in retirement or placing a prohibitive burden on the working population.”

For the first time employers will be required to contribute to workers’ pensions, she added.

She said around 48% of the workforce currently has no private scheme.

The bill was granted accelerated passage by the Assembly today.

Jobholders will make contributions worth 4% of earnings above £5,035 (€5,922) but not more than £33,540 (€39,448).

There will be a minimum employer contribution of 3% and 1% from the state through tax-relief.

Workers may opt out if they don’t wish to save.

Nigel Smyth, director of the CBI in the North, said businesses had been involved in consultation on the changes.

“There is a recognition that people do need to be saving more, so it is accepted as a reality,” he said.

Ms Ritchie said the measures would add little to employers’ costs.