Warning on risk to good pension schemes
13 May 2008
Pension consultants have warned that measures aimed at preventing employers from abusing the personal accounts system may in fact encourage good employers to close down existing schemes.
Many existing pension schemes do not count fluctuating elements, such as bonuses and overtime as pensionable pay, but under Government proposals all earnings between a lower and higher limit (between £5,000 and £33,500 per annum at outset) will count towards the 8% contribution for personal accounts. Employers will therefore have to routinely check whether the amount contributed matches the personal account contribution.
