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Pensions Bill to raise state retirement age

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The newly published Pensions Bill will see the state retirement age increase to 66.

This will happen between 2018 and 2020.

The timetable for raising the retirement age for women is to be fast-tracked so that it climbs to 65 by 2018.

The Bill also confirms plans for the eventual automatic enrolment of all employees in workplace pension schemes.

Steve Webb, the minister for pensions, said: “This Bill will radically transform the pensions landscape in this country. Millions of people who currently have little or nothing put by for their retirement will, from 2012, find themselves enrolled in a workplace pension.”

The minimum threshold for auto-enrolment has been increased from £5,000 to £7,500. Employers will be required, on a phased basis, to contribute 3 per cent of employee earnings to the fund.

Employees will be expected to pay 4 per cent, while the government will add a further 1 per cent in tax relief.

The new National Employment Savings Trust (NEST) will be available for employers who do not have a savings scheme of their own or who wish to use it as an alternative for newly enrolled workers.