ACA calls for incentives to boost occupational pensions

The
forthcoming Pensions Green Paper must bolster occupational pensions by offering
incentives, the Association of Consulting Actuaries says.

The
ACA, whose members advise thousands of UK pension schemes, has published a
preliminary report entitled 2002 Pension Trends Survey, which says the
Government needs to go beyond simplifying pensions.

Other
key findings of the ACA survey include:


32 per cent of employers are ‘at present’ reviewing their occupational pension
arrangements (a further 35 per cent have reviewed their scheme in the last
year).


42 per cent of employers say they are trying to reduce spending on pensions and
51 per cent are looking to reduce forward pension liabilities.


55 per cent of final salary pension schemes are now either closed to new
entrants (46 per cent) or future accruals (9 per cent).


Employer contributions into final salary schemes have increased by 14 per cent
in the last year.           


Contributions into occupational money purchase schemes generally are not
increasing to offset the effect of deteriorating investment returns.


Employer and employee contributions into final salary schemes average 17.6 per
cent and are twice the average level of contributions paid into money purchase
arrangements.


Fewer than 1 per cent of employees based at firms covered by the survey have
joined stakeholder schemes (46 per cent of stakeholder schemes have no members
at all).


Employers see increased incentives (tax or otherwise) as the most important
policy priority to encourage employers to sponsor occupational arrangements.

Employers
see an overall ‘lighter touch’ approach to pension legislation and regulation
as the most important government response to the Pickering proposals.

The
survey, conducted in August and September 2002, attracted responses from 336
firms, selected on a random basis, employing 1.8 million people. Employers
responding to the survey ranged from those with under 10 employees through to
those employing upwards of 50,000 staff. 

Commenting
on the survey results, ACA chairman Gordon Pollock said: "The survey
results point to a ‘widening gap’ between those employees fortunate enough to
be offered occupational arrangements and the increasing number that are not,
coupled with a growing gap in contributions to fund pensions between those in
final salary schemes and those in money purchase schemes. Today we have
published the ACA’s contribution to the debate on the future of UK occupational
pension provision. We hope the Government recognises the gravity of the current
situation and that decisive early actions are needed."

Copies
of the preliminary 2002 ACA Pension Trends Survey report and the ACA Pensions
Strategy paper are available at www.aca.org.uk

By Quentin Reade

Comments are closed.