Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • 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
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • 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
  • OHW+

Latest NewsEconomics, government & businessDepartment for Work and PensionsPay & benefitsPensions

UK companies are committed to providing pensions

by Mike Berry 17 Jul 2006
by Mike Berry 17 Jul 2006


UK companies remain committed to providing pensions for staff despite the continuing high costs, according to a major new survey published today by the CBI and Mercer Human Resource Consulting.

The survey shows that the burgeoning level of contributions companies are making to defined benefit (DB) pensions is having a significant impact on the money businesses have available to invest and is hitting profits.

Despite this, the survey of 355 CEOs, chairmen and senior board members – between them employing 900,000 staff – reveals that more than three-quarters are committed to providing an occupational pension scheme.

Eighty-six per cent of employers want to see staff reach retirement with adequate savings and 81% believe a company should play a part in raising understanding of the importance of planning for retirement.

Firms with DB schemes continue to experience high levels of pensions costs, with the survey showing that, on average, firms with DB schemes are putting the equivalent of a fifth (19.6%) of employees’ pay into schemes to fund future benefits and deficits.

As well as increasing their level of annual contributions, 45% of firms with DB schemes have made additional lump sum deficit payments, averaging £12.6m – with the highest in the survey being £200m.

The survey shows that operating a DB pension is having a negative impact on companies’ performance. The proportion of firms reporting a severe impact on profits has leapt, in the two years since the last survey, from 3% to 17%. Three-quarters (74%) of firms with DB schemes reported a significant or severe reduction in profits due to increased pensions costs, up from 50% in the last survey two years ago.

Alarmingly, 40% of firms with DB pensions schemes have cut their investment in the business – whether in people, new products or equipment – as a result of pension costs. One in five firms have also cut jobs.

John Cridland, CBI deputy director-general, said: “At a time when business investment is being squeezed by higher business taxes and the sky high price of energy, the added burden of spiralling pension contributions is threatening UK firms’ ability to invest in future jobs and growth.

“It is clear that employers remain committed to pensions but they are going to need support to weather the current pensions storm. The government must take heed of the extra burden on companies of these massive contributions and deliver on its promises in May’s Pensions White Paper to simplify rules and reduce regulatory burdens.”

An increasing number of firms are considering closing DB schemes to existing members. Twenty per cent of companies contemplating further changes to their DB schemes reported that this was their preferred next step.

Other findings include:

· More than 60% of senior executives said the government’s agreement to allow public sector workers to retire at 60 would have an impact on their business. The majority believed the decision would make it difficult for them to raise the retirement age in their own scheme.

· The biggest regulatory concern among senior executives was the Pensions Regulator’s ability to intervene in corporate transactions. Nearly 80% of business leaders put this as their top concern. For more than 60%, the level and fairness of the PPF levy was a major concern.

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.

· One in 10  firms have already raised their normal retirement age, where these are below the state pension age of 65. A further 11% are considering such a rise.

· Despite the offer of flexibility, employers expect only 2.5% of retiring employees to request postponement. The most optimistic sector was the hotel and restaurant sector (10%) and in terms of size, small and medium-sized firms were the most upbeat (5%).

Mike Berry

previous post
Most managers find workplace relationships perfectly acceptable
next post
College lecturers accept 3% pay increase

You may also like

Performance management is broken: how can we rebuild?

11 Jul 2025

Gregg Wallace case: don’t be too hasty to...

11 Jul 2025

‘Replace sick notes with gym’, Streeting tells GPs

11 Jul 2025

Workers with second jobs at an all-time high

11 Jul 2025

How using data can transform return-to-office mandates

11 Jul 2025

Ministers loosen fire and rehire proposals in Employment...

10 Jul 2025

£188k tribunal award for director sacked after cardiac...

10 Jul 2025

It’s no secret – parity in the workplace...

10 Jul 2025

Firms’ salary secrecy means ‘they lose out on...

10 Jul 2025

Court of Appeal rules that Ryanair agency pilot...

9 Jul 2025

  • Empower and engage for the future: A revolution in talent development (webinar) WEBINAR | As organisations strive...Read more
  • Empowering working parents and productivity during the summer holidays SPONSORED | Businesses play a...Read more
  • AI is here. Your workforce should be ready. SPONSORED | From content creation...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
Forum for Expatriate Management
OHW+
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
    • Wellbeing
    • Recruitment & retention
    • 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
  • OHW+