J Sainsbury has seen workers saving more towards their retirement since changes to the pensions regime were announced. Geof Pearson, pensions manager at the supermarket chain, said that employees were baffled by the current system and the new rules are a great help.
He said: "Our side of the industry is always bleating and complaining, but the Inland Revenue has done something that is very helpful to the cause of cutting red tape. "We are finding that the new tax-free lump sum is encouraging people to work longer. We are also seeing people saving more towards their retirement. "The firm is keen to encourage this and thinks this could come about a lot more after April of next year." Under current rules, some schemes are restricted as to what employees can save. From April 2006, there will be just one limit of £1.5million on tax-free savings.
"You just put what you want into the pension. It makes it a lot easier to understand and you have a lot more freedom," said Pearson. Nevertheless, he added that something still had to be done to encourage all employees to sign up to the pension scheme. "While we are seeing more people saving, we have still got a big problem with non joiners. "If somebody is not in a pension at all then I don’t think the new rules necessarily help them. It might simplify joining a scheme, but that remains to be seen."