Two-thirds of UK employers plan to reduce pension payments to new employees when the national pensions savings scheme (NPSS)
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.
Ian Naismith, head of pensions market development at the firm, said: “It is very worrying that companies which already have generous pension arrangements are likely to reduce their contributions once personal accounts are introduced.
“The government needs to make it as easy and worthwhile as possible for them to retain their existing arrangements,” he added.