One place I’ve never been and would love to go is Australia.  I’ve heard it’s mainly sunny, has great beaches and apparently it’s not unusual to have a BBQ at Christmas.  However the aspect of Australia I’d like to consider in this entry is the changes they have made over the last few years in their pension laws.

In 1992 the Australian government made a decision.  They could see that their ageing population would put quite a heavy burden on the Australian state pension system and wanted to encourage both individuals and businesses to contribute more towards their retirement needs.

Whilst individual contributions are largely voluntary in Oz, Employer contributions are compulsory.  An employers minimum contribution into their employees scheme started at 3% but was gradually increased and currently the minimum compulsory employer contribution is 9%.

This compulsion has contributed to Australian citizens having one of the highest proportion of ‘invested’ funds per capita in the world and generally far more prepared for their retirement than us in rainy old blighty.

Whilst there’s still work to do in Australia to provide a decent standard of living in retirement they have taken great strides forward over the last few years since the introduction of their compulsory pension scheme….and when compared to the UK they are strides ahead

A recent study by HSBC compared our provisions of retirement (in the UK) with selected countries from the rest of the world, including Australia.

Of all the countries surveyed the UK population were the least prepared for retirement and the nations who were more prepared for retirement included India, China, the United States and Australia.

Whilst there needs to be a degree of personal ownership, with individuals taking responsibility of their own retirement it’s been found in Australia enforcing compulsory employer pension contributions has meant that individuals have a larger pension pot and therefore are better prepared for retirement.
In the UK we’re taking the lead of our colonial cousins from a sunnier land and have introduced a workplace pensions environment which includes a degree of compulsion.

‘Auto enrolment’ require employers to enrol their employees into a workplace pension, manage these schemes and is bound by specific rules when it comes to contribution levels, ‘opt outs’ and who the scheme needs to be provided to.

It’s also ‘live’ today with many larger employers with the rules coming into play on the 1st October 2012.  However many smaller and medium sized employers are not even close to prepared for the changes in the rules (which are being phased in over the next few years)

My suggestion is that if you run a business, regardless of it’s size you should be aware of
and start preparing for these changes.  Whilst the new rules might not apply to you immediately there will be an avalanche of employers trying to prepare themselves for the new rules later rather than sooner.  To ensure minimal disruption to your business I believe that it’s important to ensure that you know you are ready before you need to be.

After all, in Australia if you have a job it’s compulsory that you are offered a pension where your employer contributed.  The UK version of these rules will be impacting your business shortly.  So the questions are, if you are an employee were you aware of this potential entitlement?  or if you are an employer are you ready for the potential pensions avalanche which is guaranteed to impact your business?