The United Kingdom detected a problem in its pension system more than a decade ago and began working to reverse the situation. In 2012, British businessmen began to be obliged to enroll in the new pension system all those employees who earned more than 1,000 pounds per month (1,170 euros) and were over 22 and under 65. That was the first step of the system Automatic enrollment, which is voluntary. "It is a system in which the employer is obliged to register his worker, but he can decide to get out of there and receive in his salary the contributions that would go to his private savings”, Says Fernando Martínez-Cue, associate professor at the University of Barcelona and consultant specializing in pensions and creator of the‘ Automatic Enrolment Británico ’study for Unespa.
The truth is that it is, in broad strokes, a voluntary private capitalization system that offers the British a simple way to save. “The system is born after verifying that it is much easier to save if it is done in this way. If instead of automatically enrolling in the system, it had to be done later, the registration fee would be lower, ”says Martínez-Cue. The truth is that, in 2012, only 55% of British employees are part of this system and now 78%.
How does it work?
Once the employer registers the employee in this pension system, they proceed to make a minimum mandatory monthly contribution of 8% of salary. This percentage is paid as follows: 4% the employee, 3% the employer and 1% the State. Of course, the percentage can rise voluntarily if the worker decides to increase that 4%.
This new model is causing pensions in the United Kingdom to reach their highest levels. The public pension, previously, only covered 24% of the worker's average salary. That is, for an employee who charged 1,000 pounds per month, the pension would be just 240 pounds. That is why this new system is helping to promote savings and improve pensions.
“Only 9% of workers automatically enrolled in the system have opted out, while the remaining 91% have preferred to stay, ”says the report. In addition, more than 82% rate this new system as "positive" for their financial health.
In addition, this system allows voluntary investment. In other words, registered workers may decide whether part or all of the amount paid is invested in any available investment vehicle, such as an investment fund or a pension plan. "The requirement is that no more than 0.75% commissions be charged by external managers," says Martinez-Cue.