Employers' hopes of minimising the costs of setting up a fund to protect company pension schemes may be stalled by the Government this week. But a new survey suggests that confidence in long-term saving is growing again.
The Pensions Bill, the culmination of two years' work on streamlining the pensions system, is within days of publication. The Secretary of State for Work and Pensions, Andrew Smith, will set out plans, already flagged by the Government, for a pension protection fund, which will act as a safety net to secure benefits when companies go bust.
Today's survey from the Association of British Insurers (ABI) has found that trust in Government pension policies is up from 15 per cent to 17 per cent; 38 per cent of people are confident they will have enough money to retire on, up from 35 per cent; and 32 per cent of people would save spare cash, up from 26 per cent.
The ABI's head of pensions and savings, Joanne Segars, said: "These figures show a small but significant change in the public's attitude and levels of confidence towards pensions and savings in general. People are starting to think about savings for retirement and it looks like the question 'Am I doing enough?' is starting to filter through. This is an opportunity for Government, the savings industry and employers to build on this change in attitude and help people to meet their expectations."
The government's proposed pension protection fund is aimed at restoring confidence in pension savings, following a number of high profile collapses that have left workers' pensions in the lurch. But eight months after the proposal was first mooted, however, the Department for Work and Pensions is thought to have got no nearer a solution as to how to charge levies for the scheme.
Companies look set to pay a flat-rate levy coupled with a premium linked to how strong it and its pension scheme are, but the Government is understood to be struggling to come up with a way of assessing risks.
David Yeandle, of the Engineering Employers' Federation, said: "These are difficult issues for the Government and if it wants to have the scheme in place by April 2005, it seems likely that it will impose a flat charge to start with. This is bound to be very onerous for some companies as everyone will be paying the same, regardless of their size and risk."
Only outline details of the protection fund are expected to appear in the Bill this week, leaving employers still in the dark over how their risk will be assessed and how much the fund will cost.
Susan Anderson, of the Confederation of British Industry, said: "It could well be a damp squib and we could know no more than we do already. It is very important to sort out how it is funded. The US operates a similar scheme that is $8bn (£4.4bn) in deficit." Employers fear that the additional costs will be too much for companies, already struggling to keep pension promises. They also argue that employers with well-funded schemes should not have to bail out weak companies. The CBI is concerned that companies could be heading for another period of uncertainty, and landed with a system of flat-rate levies that takes no account of a company's risk of going bust.Reuse content