Personal pension accounts will not force UK employers to cut pension contributions

Fears that the introduction of new personal pension accounts will force UK employers to reduce their contributions and slash jobs have been vastly overstated, new research has revealed.

Just 1.2% of the 522 companies surveyed by reward provider Thomsons Online Benefits said they planned to reduce their pension contributions – so-called ‘levelling down’ – following the introduction of the government’s National Pension Savings Scheme (NPSS)

Only a handful of organistaions are planning to reduce employee headcount (5.1%) or implement a recruitment freeze (2.6%).

Under the proposed scheme – one of a series of recommendations made in the government White Paper on pensions encourage people to save for their retirement – employers will be required to contribute to workers’ pension schemes at a minimum rate of 3% of their salaries.

Employees themselves will contribute a minimum of 5% to the personal accounts, while the government will also make contributions to the NPSS accounts through tax relief.

These findings were among a number revealed in Thomsons Online Benefits’ fourth annual Employee Rewards Watch research.

Respondents who do not currently have any employee benefits were asked how they would deal with the planned introduction of compulsory pension contributions.

About one-third of respondents said they did not know what action they would take, while more than two-thirds did not think the introduction of compulsory employer pension contributions would do anything to resolve the pensions crisis.

Michael Whitfield, managing director of Thomsons Online Benefits, said: “The results surrounding companies’ planned response to the introduction of compulsory pension contributions bear out what we are hearing when talking to the UK’s top employers.

“The main focus for HR teams is the struggle to attract, retain and motivate the best talent. Measures to cut back on benefits such as levelling down on pension contributions simply do not fit into this strategy.”

Comments are closed.