Employers baulk at flexible retirement options


Nine out of 10 firms have shunned government plans to encourage flexible retirement, according to a new report.

Key changes to pensions regulations, which come into force this week, were introduced to persuade people to keep on working, albeit part-time.

But Tim Keogh, a partner with consultancy Mercer, which is behind the report, explained that employers had baulked at the complexity of the calculations necessary to introduce “mix and match” arrangements which are part-pension and part-salary.

He said: “It sounds attractive in principle, but when you begin to look closely at the calculations necessary, it becomes a complete nightmare to administer.

“Our survey would seem to indicate that firms haven’t bought into the idea yet. It may be that this will come over time via evolution rather than revolution. But the reality is few final salary schemes could currently cope with the complex administration.”

In its survey of 1,000 final salary pension schemes, Mercer found 30% of employers were prepared to allow staff to continue working if they left final salary arrangements and opened a money-purchase added scheme.

Keogh said: “However, this is not what the government really had in mind. They want employees to gradually wind down to retirement, by continuing in their current jobs and drawing a pension while they keep working and maintaining membership of their current scheme.”


http://www.mercerhr.com/


 

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