Published On: Thu, May 9th, 2024
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State pension update as £100 change will ‘transform’ retirement savings | Personal Finance | Finance

A proposed universal could help thousands of people save up for their retirement in a “transformative” move.

A petition has been launched on the Parliament website calling for all people to get a pension fund from birth with £100.

The message states: “Introducing a pension with £100 starting capital for all children born in the UK could be a transformative policy with numerous benefits for the children themselves and wider society.

“This policy could help instil the importance of financial planning and saving from an early age. Early learning about pensions and long-term savings could empower children to make informed financial decisions that will benefit them and future generations.

“By providing £100 in starting capital, the Government is kickstarting a wealth accumulation process for children that could, along with auto enrolment, provide them with a substantial retirement fund by the time they reach retirement age.”

If the petition can reach 10,000 signatures, the Government will be required to provide a response.

If the campaign can get 100,000 signatures, the topic will be debated in Parliament. You can read the petition in full here.

Under the current pensions auto enrolment rules, workers aged 22 and over who earn above the lower earnings limit of £6,240 automatically join a workplace pension.

A minimum of eight percent of the person’s salary has to go into the pension, which as a standard includes five percent from the employee and three percent from the employer.

This is being extended to all workers aged 18 and over and to any amount of earnings.

Rachel Vahey, head of policy development at AJ Bell, explained how the expansion of the scheme will benefit workers.

She said: “Removing the lower earnings band of £6,240 means increasing pension contributions by just under £500 a year for most automatic enrolment pension savers.

“This could provide a boost of over £120,000 to someone’s pension pot over the course of a 50-year career, depending on investment growth.

“The best bit is that the employer must pay at least £187 of this, meaning everyone with a standard workplace pension that meets minimum requirements will get more money toward their pension from their employer.”

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