Government Proposes New Pension Scheme


In a previous post, we discussed how the proportion of older people considering company formation, had risen exponentially over the last year. A fact the government has failed to recognise, if their proposed 2012 pension reform scheme is anything to go by.

The government is positioning this new scheme as a ‘complete overhaul of the current system. ‘Under the new scheme, employers will be asked to pay into a private sector pension called a Personal Account. While the government will not force employers to join the scheme, they will make it increasingly difficult to ‘opt out’.

The announcement of the government’s proposal has prompted immediate feedback from the SME sector. Nadia Kitman, director of small enterprise at accountancy firm ‘Lawrence & Smith’, comments; “ While there is an increasing need for the government to recognise that we have an aging population in this country and as a consequence, the current pension scheme does need an element of reform, I am not sure they are going about it in the correct manner.”

“On the one hand, under the new reforms, companies who have previously ignored pension schemes, choosing to offer an alternative , will no longer be sanctioned to do so. Yet on the other hand, the government is ignoring the fact that people are living longer and doing so in better health. Ultimately, the governments scheme, fails to recognise not only that a lot of the older generation want to work longer, but also the benefits that could have to the wider economy ’

In conclusion, it is clear that the government needs to look again at the pension scheme, nut it is crucial they do so informed by the changing nature of society.