Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Recruitment & retention
    • Wellbeing
    • Occupational Health
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Recruitment & retention
    • Wellbeing
    • Occupational Health
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise

Latest News

Pension contributions too low for decent retirement

by Personnel Today 14 Nov 2002
by Personnel Today 14 Nov 2002

Far
too little is being saved in defined contribution pension plans to provide a
decent income in retirement, according to new evidence.  

A
survey by Mercer of more than 450 employer-sponsored schemes – many of them
newly established – shows that employer contributions average just 6 per cent
of salary, marginally down from 6.3 per cent in a previous survey two years
ago.

Average
employee contributions are 3.3 per cent, producing a total contribution of just
9.3 per cent of members’ annual salary.

Tony
Pugh, European partner at Mercer Human Resource Consulting, commented:
"This is what we feared. 

"Contribution
levels are not going up despite the increasing cost of pensions and the need
for people to save more. Many will face the choice of a longer working life or
a smaller retirement income dependent on the State."

He
added: "The main concern must be that employers are switching from final
salary to defined contribution schemes and, at the same time, reducing the
amount of funds they contribute. In the current economic environment, the
amount is often half what they would have to provide for final salary
pensions."

Allowing
for reductions in National Insurance contributions, most employers with final
salary schemes need to contribute at least 12 per cent of members’ salaries to
fund their pension promises. This compares to the average of 6 per cent that
employers currently pay into defined contribution plans.

Mercer
calculates that a 45-year-old man joining a defined contribution plan and
making total contributions of 9.3 per cent of salary, would receive an expected
pension of 14 per cent of his final salary, on retiring at age 65. This
compares to an expected pension under a typical 60ths final salary scheme of 33
per cent of salary.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Mercer’s
survey shows that employers in the banking and finance sector pay the highest
contributions to DC plans – an average of 8.1 per cent.  This compares with the food and drink,
transport and publishing industries, which contribute just 4.4 per cent, 4.6
per cent and 4.9 per cent respectively. 

By Ben Willmott

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Recruitment professionals’ pay hit by downturn
next post
T&G calls for investigation into contamination incident

You may also like

Employment Rights Bill U-turn unlikely, say legal experts

10 Sep 2025

Gregg Wallace launches legal action against BBC dismissal

10 Sep 2025

University workers to vote in ballot for national...

10 Sep 2025

Day one rights in the Employment Rights Bill...

10 Sep 2025

‘Troubling gap’ in confidence to discuss suicide at...

10 Sep 2025

Employers need to step up on wellbeing provision,...

10 Sep 2025

Medical profession still suffers from ‘deep-rooted inequalities’

9 Sep 2025

Workplace health benefits need to be simplified

9 Sep 2025

Two in three NHS staff say pay is...

9 Sep 2025

Sickness absence soars to nearly two weeks per...

9 Sep 2025

  • Workplace health benefits need to be simplified SPONSORED | Long-term sickness...Read more
  • Work smart – stay well: Avoid unnecessary pain with centred ergonomics SPONSORED | If you often notice...Read more
  • Elevate your L&D strategy at the World of Learning 2025 SPONSORED | This October...Read more
  • How to employ a global workforce from the UK (webinar) WEBINAR | With an unpredictable...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits Live
Employee Benefits
Forum for Expatriate Management
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Recruitment & retention
    • Wellbeing
    • Occupational Health
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise