Payback time for ‘pensions holiday’ employers

Employers’
contributions to pension schemes have risen by 25 per cent during the past two
years, according to research by Incomes Data Services (IDS).

The
study reveals that employer contributions increased in the last year to £6bn
from £5.3bn.

However,
IDS finds that the rise reflects the way many companies took ‘pensions
holidays’ during the boom of the 1990s, using the increasing price of
investments to justify halting their contributions or even taking money out of
their funds.

More
than a quarter of the total payout in the 24 months under review was for
"special contributions", to make up for shortfalls and to cover early
retirement and other contingencies.

These
payouts account for more than the total rise in overall contributions.

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The
survey also reveals that one in 10 schemes receive no employer contributions at
all.

By Ben Willmott