Workers slash pensions contributions in recession

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The Independent Online

Staff at a quarter of British companies have cut or suspended pension contributions during the recession – threatening to exacerbate the country's retirement-funding crisis.

Punter Southall, the pension consultant and administrator, will today publish an annual report into the state of retirement provision in the United Kingdom. It says workers have reacted to widespread pay cuts and pay freezes by suspending pension saving.

And the firm warned that many may never make up for the lost contributions. Damian Stancombe, head of corporate defined contribution pensions, said: "People have chosen to focus on living in the present which is understandable enough. What they are forgetting is that employers usually match contributions, so they are losing out on a significant benefit by doing this. It will also undoubtedly make this country's pension funding crisis worse."

The study drew responses from 330 UK employers, including 24 FTSE 100 companies, with workplace pension provision. The fieldwork was conducted between December and January.

The study also found that while nine out of ten employers believe that there will be a change in government after the forthcoming election, more than half of them (57 per cent) believe this will make little or no difference to pension policy.

Mr Stancombe said there was "a marked disenchantment" with all parties' pension policies. He highlighted a respondent who urged government to "stop mucking about with pensions legislation", while another complained that "they cannot leave pensions alone".

"Politicians on all sides have clearly failed to convince UK plc that they have adequately addressed the challenges facing our pension system," he said.

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