Britain Puts You in a Pension Unless You Say No — Epoche B1
In Britain, an employer must put a worker into a workplace pension automatically, without being asked. The rule comes from the Pensions Act 2008 and was staged in from 2012, beginning with the largest employers. If you are aged twenty-two or over, below State Pension age, and earn more than ten thousand pounds a year, you are in. To leave, you have to fill in a form. The problem it was built to solve was simple. For years, governments assumed that people did not save because they did not understand pensions, so the answer was better financial education. Leaflets were printed, and very little changed. Saving for retirement asks you to give up money now for a person you will only become in forty years, and most of us postpone that decision for ever. So the reformers changed the default instead of the argument. Doing nothing now means saving, and the effort has moved to the other side. Millions of workers who had never opened a pension are paying in: total contributions are eight per cent of qualifying earnings, of which the employer must provide at least three. An honest column has to name the costs, and there are two. Eight per cent is not a comfortable retirement. It is a beginning, and a saver who never raises it will be disappointed. The rule only catches the people it can see. Workers below the ten-thousand-pound line, who are often part-time and often women, and the self-employed, are never enrolled at all. Defaults are powerful precisely because they work on people who are not paying attention. That is their strength, and it is also the reason we should be careful about where we point them. References United Kingdom Parliament (2008). Pensions Act 2008. The Stationery Office. Department for Work and Pensions (2017). Automatic Enrolment Review 2017: Maintaining the Momentum. Department for Work and Pensions.