Two-thirds of employers plan to reduce pension payments to new employees

Two-thirds of UK employers plan to reduce pension payments to new employees when the national pensions savings scheme (NPSS)  is introduced, research has suggested.

A further 23% of employers said they intended to cut the level of pension contributions they paid to existing workers once the system of personal accounts was introduced in 2012, the survey by financial services company Scottish Widows found.

Under the proposed scheme – one of a series of recommendations made in the recent government white paper on pensions to 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 accounts through tax relief.

However, the research by Scottish Widows shows that while some employers make contributions to existing workplace pension schemes above the 3% level that will be required from them under the new scheme, many are planning to “level down” their contributions to the minimum amount.

Scottish Widows claims that if the trend indicated by its survey of 750 employers is reflected across the UK, company pension provision in the UK will be less generous once the new scheme is introduced than they are today.

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

Receive the Personnel Today Direct e-newsletter every Wednesday

Email(Required)

OptOut

From time to time, we will send you emails about selected products, events and services from Personnel Today and OHW+ - but you can choose to opt-out at any time. If you do not wish to receive these emails, please tick this box.

Name

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

Δ