21 August 2006
Pension saving plans proposed by the Turner Commission could
lead to lower occupational pension payouts, according to research
published by Deloitte. The survey, carried out on 750 employers,
revealed that employer contributions to occupational pension
schemes could be cut back if they were required to pay into the
proposed national savings scheme.
The proposed national pension savings scheme would require
employers to contribute a minimum of 3 per cent if the employees
chose to join it, on top of any contributions the employer may be
making to its own occupational pension scheme. Employers would have
to invite all employees to join the new scheme, including those who
were not currently members of the existing scheme.
The CBI warned back in February 2006 that this could lead to
contributions to existing schemes being cut back. The Deloitte
survey, up to a point, echoes this fear, indicating that most
employers would continue to pay the same contributions for existing
pension scheme members, but eight in ten respondents warned that
this might not be the case for new joiners.
A consequence of this would mean that people might save more,
but those moving jobs would receive lower contributions, and in a
market where job turnover In the private sector runs at 13 per cent
a year, this could reduce contributions for a large proportion of
workers, thereby negating any benefit the new scheme could offer to
existing savers.
