Government
policy on the proposed Pension Protection Fund (PPF) is currently poorly
expressed and needs greater clarity if it is to have any chance of greater
employer support according to the latest EEF/Aon Consulting survey.
This
call was made following publication of results from the survey, which analysed
the views on the PPF of just under 50 of the UK’s largest manufacturing
companies with occupational pension schemes.
Despite
a high level of support in principle for the idea of the PPF, the survey showed
that, as it is currently designed, there is still considerable confusion and
uncertainty among employers about how the PPF will operate and the costs that
they will incur. Until these are resolved, it is clear that it will be
difficult for employers to give greater support to the PPF.
Key
findings from the survey:
•
Two-thirds of the companies supported, in principle, the idea of the PPF
•
Three-quarters felt that employers should be able to recover all or part of the
PPF levy from pension scheme members
•
Nearly 85 per cent of the companies who responded felt that the introduction of
the PPF would have a negative or no impact on their decision to provide a
defined benefit occupational pension scheme in the future.
Commenting
on the findings, David Yeandle, deputy director of employment policy at the EEF
manufacturers organisation, said: "Employers clearly need more information
about the way in which the PPF will operate to make a proper assessment of its
practical implications for their business. Time is rapidly running out if this
is to be done before the PPF’s planned implementation in April 2005.
"These
results also reinforce the EEF’s view that there is very little in the Pensions
Bill encouraging employers to introduce new, or enhance existing, occupational
pension arrangements," Yeandle added.
Donald
Duval, head of professional practice at Aon Consulting said: "It is a
terrible thing to lose your pension savings because your company has gone
broke, and something needs to be done about it. Fortunately it is a relatively
rare event, and the majority of the UK public will receive their pension
savings on retirement. Yet for too many, this will still not prove enough to
provide a decent pension – because not enough is being saved.
"The
Government must not lose sight of this bigger issue – the savings shortfall. It
is vital that it continues to promote a better understanding of saving for
retirement and encourage greater pension provision now more than ever
before."
