The latest research by Watson Wyatts reveals that up to a third of FTSE 100 companies are not prepared for the new regulatory pension requirements that are due to take affect in three years time. According to their FTSE 100 Defined Contribution Pension Scheme Survey, many companies will have to make significant and costly adjustments to the way their pension schemes work in light of the upcoming changes. This could have a significant impact for all employees involved as the research found that 12% of employers, who are prepared for the changes, suggested that they would have to increase employer costs. While on the other hand only a quarter of those surveys said that no changes would be required to their current pension scheme.

So what are the changes that are going to take effect in 2012? Under Part 1 of the Pensions Act 2008, due to take effect in 2012, all employees over the age of 22 and generating an income of over £5,035 who are not currently in a workplace pension scheme will be ‘auto-enrolled’ into one. This means that every salaried individual in full-time employment will have a work-based pension. What’s more the government is requiring all employers to contribute 3% of their employees earning (within a threshold) into their pension. This forms part of the government’s financial inclusion strategy to ensure individuals take greater responsibility for their retirement.