Government must begin to simplify complex taxation rules and legislation around
pensions or face more firms abandoning occupational schemes.
is the message from a major new pensions survey of 559 engineering employers.
shows the majority of employers want to continue offering pension schemes but
financial and legislative pressures are forcing closures.
Yeandle, deputy director of the Engineering Employers Federation said declining
stock market returns, minimum funding requirement and introduction of FRS17
have put huge pressure on final salary schemes.
warned that pension rules were too complex and called on the Government to
address the whole issue of pensions in its forthcoming Green Paper.
Government should be making pensions more understandable and attractive. This
is a long-term problem and we need to get a consensus on the future of pensions.
key message is that engineering firms are still interested in providing schemes
for staff, but are suffering financial problems that makes it difficult."
survey shows more than 200 companies have closed final salary schemes to new
staff – the majority in the last three years.
further 54 firms have closed final salary schemes to existing staff and there
was also a considerable acceleration since 1999.
findings of the EEF survey
Defined benefit or final salary schemes are still the most common provision,
but money purchase schemes have increased since 1998
The rate at which employers are closing pension schemes or reducing benefits
has accelerated rapidly in the last three years
The main reason for offering a pension was ’employee welfare’
Minimum Funding Requirement and rising costs are main reason for closing final
Nearly three-quarters said all employees should make a compulsory minimum
contribution of between 4 and 6 per cent