Pensions reform minister promises to act if employers level down pension plans

The government will guard against employers levelling down pension contributions, the pensions minister has told Personnel Today.

Mike O’Brien, minister for pensions reform, said he would act to prevent employers using new laws to cut pension contributions to the minimum required.

Under the government’s proposals for pensions reform, employers will be required to auto-enrol all employees into either an existing pension scheme or a personal account, which will have a minimum employer contribution of 3% of an employee’s wage.

O’Brien told Personnel Today: “We are aiming to restrict the ability of employers to level down.

“There will be a lot of information out there by 2012. Employees and trade unions will be aware if their employer is trying to level down, and there will be reaction against it.”

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However, he added that he did not expect big companies to try to level down. “They consider pension schemes to be beneficial for recruiting,” he said.

Employers’ groups have raised concerns that small organisations will face unmanageable administrative burdens. But O’Brien said: “We will need to make very complex decisions about where we pitch some of these issues, particularly around exemptions. By 2012 small employers will need to know about and comply with automatic enrolment.”