Pension reforms may prompt firms to cut benefits

Click to follow
The Independent Online

One in four companies would be forced to consider reducing the amount it pays into employees' pensions if the Government's proposed reforms are put into practice.

According to new research from Deloitte and the Association of British Insurers, many companies that now offer generous pension plans would be forced to reduce their contributions if they were compelled to pay 3 per cent of every employees' salary towards their retirement fund.

The Government's final proposals for occupational pension reform are to be published in a white paper next month. The pensions minister, James Purnell, had told the industry to expect the paper on 4 December, but it emerged yesterday that it is unlikely to be published until 12 December.

Speaking at an ABI conference today, John Hutton, the Secretary of State for Work and Pensions, will say that the paper is based on five key pillars - promoting personal responsibility, being fair, especially to women and carers, being simple, being affordable and being sustainable for the long term.

The ABI's research also revealed that more than half of the population are still failing to save enough for their retirement despite attempts over the past few years to repair Britain's broken savings culture.

Also speaking at the conference today, the trade body's director-general, Stephen Haddrill, will warn the Government that its proposals may not be enough to reignite the ailing savings culture.

"Let's not deceive ourselves," he will say. "The British non-saver will not be easily convinced to drop the spending habit... We need a real step-change in public attitudes. Pussyfooting will not deliver that."

Which?, the consumers' association, yesterday criticised the ABI for trying to undermine the Government's proposals. Doug Taylor, a personal finance campaigner for Which?, said: "We need to move the debate on from points scoring and really focus on how the industry plans to instil trust to encourage consumers to save now for their retirement."

Comments