29 January 2007
More than half of senior executives believe staff pension
schemes are inadequate to fund a comfortable retirement, according
to a survey by Fidelity Pensions Management.
Fidelity Pensions Management surveyed senior executives from 100
UK firms, employing one in ten of all workers. More than half of
those surveyed felt that staff pension schemes are inadequate to
fund a comfortable retirement.
This feeling of inadequacy was most acute in firms which offer a
pension where returns are based on investment performance rather
than final salary.
In recent years, many firms have replaced final salary schemes
with less expensive money purchase plans. According to Fidelity,
this shift to money purchase has resulted in lower employer and
employee pension contributions eroding retirement income prospects.
Fidelity estimates that companies pay 19 per cent of salary on
average into a final salary scheme compared with 7 per cent for a
defined contribution scheme.
The results of the survey suggest that senior executives are
aware of this sea-change and its potential implications for
employee pensions.
"Finance directors are in the invidious position of knowingly
providing many of their employees with an inadequate pension," said
Simon Fraser, Fidelity president of international business.
