Legal & General has announced that it is in favour of 'soft' compulsion for pensions savings, believing it can help resolve the pensions crisis and allow employees to retain flexibility and freedom of choice.
Analysis of the building society's own staff pension fund showed that 76 per cent of the 5,000 staff offered soft compulsion to save had taken advantage of the initiative.
Soft compulsion works when an employer matches an employee's contribution pound for pound to a maximum level of three per cent of pay, according to Adrian Boulding, director of pensions strategy for Legal & General.
"The unique feature of our soft compulsion proposal is that it will force employers' hands where they currently choose not to support staff who want to save for retirement, while employees who have other priorities have the option of electing not to join the pension scheme and so retain 100 per cent of their wages as take home pay," Mr Boulding explained.
He added: "It's a best of both worlds solution."
Mr Boulding also indicated that a rise to a match of six per cent of pay will be needed in time.Click here to find out more about pensions.
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