A Study On The System Of Professional Pension Automatic Enrollment In The UK

As an early entry into the aging of the country,the burden of pension in the UK is very heavy.In the 1980s,the UK was deeply affected by the economic crisis,so economic development was extremely slow,and there even was negative growth.As an important part of public expenditure,pension expenditure bring great pressure to government finance.In the face of the expanding fiscal deficit,the Thatcher government began to reform and implement the privatization of pensions,cutting public pensions,the establishment of an agreement to withdraw from the system,supporting occupational pension,changing the traditional pay-as-you-go to fund accumulation,encouraging the development of private pensions.After that UK government continued the privatization of the reform process as a whole,only did some small repair and adjust.The whole privatization reform process did not completely help the country go out the plight of the pension,on the contrary,the level of public pension declined,pension income distribution gap widened,professional pension coverage decreased and private pension markets underdeveloped.In order to change this situation and solve the problem of people not saving or less saving,in 2005,the Pension Committee proposed to establish a mandatory second pillar.In 2008,the Pensions Act was introduced to establish a professional pension "automatic enrollment" system,which started from October 2012.The Pensions Act requires the employers within the prescribed period of time,automatically enroll the employees which the age are between 22 years and under the national retirement age,the annual income exceed the income trigger point of 10,000 pounds(2016/17),work in the UK and did not participate in other qualified occupational pension plans into qualified professional pension plans.These plans require that the total contribution is not less than 8%of the eligible income and the employers contribute not less than 3%.The system has a certain legal mandatory,but the specific system design is fully flexible,the threshold for employers and employees is very low,it is supported by government tax incentives,in order to guarantee the implementation of the system,the government establishes specialized management agencies--National Occupational Savings Trust(NEST)to provide and operate pension plans and provide detailed guidance and professional services to employers and employees.Since the implementation of professional pension automatic enrollment system,the UK has made remarkable achievements,rapidly expanded the coverage of professional pension,rejuvenated the vitality of the British pension system.This article uses a lot of data to show that occupational pension participation rate increased significantly,occupational pension contributions increased year by year,the total savings also substantially increased.The system is not only conducive to social equity,but also to institutional sustainability,while increasing the cost and risk of employer employees.In general,the UK automatic enrollment system is a successful practice of rapidly expanding professional pension coverage,its reform causes,reform starting point and reform path are similar with Chinese professional pensions reform,so it has many implications for the China to develop professional pensions:giving employees full autonomy,lowering the threshold for enterprise annuity access,gradually establishing a mandatory enterprise annuity system,giving the enterprise pension system fully flexible,the implementation of tax incentives and other supporting measures,the establishment of specialized management and supervision institutions.