Pension contributions 'set to rise' under new regulations
07-08-2008
The government plan to raise the minimum wage for 18 to 21-year olds could see employers having to contribute more to personal accounts, it has been warned.
In March, Labour pledged to raise the wage from £4.60 to £4.77 for those aged between 18 and 21, while 16 to 17 year olds will receive an hourly rate of £3.53.
According to advice from consultants Watson Wyatt, if the changes are implemented in October those who opened a personal account under the previous wage could be entitled to £1.10 more per week in employer contributions.
However, the popularity of pension schemes within the age bracket has been called into question.
Principal of Surrey-based IFA Christie Scott's Julie Hedge said: "There is not enough education around and it is possible that by their early 20s some young people may be paying off debts – in which case disposable income may be king."
In other news, the government abandoned a plan to top up the wages of service industry workers with non-cash tips.
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