One of the easiest ways to figure out how, in practical terms, the new system governing UK pensions differs from the previous system is to look at the real-life examples provider by the Department for Work and Pensions.
For example, ‘Fiona’ aged 27 earns £37,000 a year working for a recruitment consultancy company, and is not currently enrolled in a workplace pension scheme. Under the old ‘stakeholder’ system this would certainly make her available for a variety of government pension schemes, but she would not be automatically enrolled in any of them. However, under the new system – as she crossed the threshold of £8,105 in income per year – she would automatically be enrolled in a pension scheme. ‘Raj’ however, earns £17,000 a year and is 20 years old will not be automatically enrolled in the new pension scheme, as it is not available for anyone below the age of 22. However, as soon as he crosses the threshold he will be automatically enrolled.
This is certainly an identifiable difference as though the previous ‘stakeholder’ system was not automatic for anyone and was potentially available for anyone of working age to take advantage of. However, what neither the old ‘stakeholder’ system or the new system that comes into effect in October of this year will ever seek to supersede is pension provision that you have made off your own back. For example, by selecting a pension from a provider like nowpensions.com. Clearly it can only be a positive step for a British citizen to feel that they are the best person to manage how they are going to provide for their future, and certainly the Conservative government’s mantras of self-sufficiency and mature financial management will only encourage you to go looking for a pension like one from Now Pensions if you see fit.