By Lisa Barron
A compulsory corporate pension plan is “not suitable” for some staff members, especially those 50 and older and who significant debts, according to a Prudential-sponsored report from Britain’s Pensions Policy Institute.
That assertion comes amid UK
’s new pension regulations, which liberalize how people are able to spend their pension funds.
The Pensions Policy Institute Report said that while “the vast majority” of older workers will benefit from a mandate for employers to pay into a pension for their employees, there is a segment of workers older than 50 who should reject the offer of a pension from their employers.
That group includes those who have significant debts such as a large mortgage or huge credit card balances.
The PPI report said more than 95 percent of older workers “are likely to receive good value on their pension contributions
, “for some groups, it may still be sensible to opt out of pension saving, particularly if they have issues with affordability and debt.”
Deputy Director of the PPI Mel Duffield said, “If they have large mortgage payments or unaffordable credit card debts, it might be a better choice to pay down that debt, rather than make pension contributions.”
The report added, “There is concern that some people for whom automatic enrollment is not suitable … because they have other priorities, such as paying down debt, will not opt out.”
Still, UK pension fund expert Dr. Ros Altmann maintains auto-enrollment can be a big boon to retirement income
. “Opting out of auto-enrollment is turning down free money,” she said.
Originally published on BenefitsPro.com