Four of the UK's biggest life insurers attacked the Government's proposed pension reforms yesterday, claiming plans to compel employers to contribute to their staff's retirement savings would result in millions of people being worse off in their old age.
Aegon, AXA, Scottish Widows and Standard Life said a recent survey of some 750 UK employers revealed that the most likely result of Lord Turner's reforms would be a reduction in pension contributions by most companies.
Although the Government is still in talks with the industry about the design of a new personal accounts system, it has given a strong indication that it is wedded to the ideas of automatically enrolling all staff into their company pension, as well as forcing employers to contribute.
But the insurers said most employers believe they would be unable to afford the combined effects of increasing numbers of staff joining the pension scheme, and compulsory contributions. Total employer contributions will drop by more than 10 per cent over the first 10 years of the new policy, the insurers said.
Ken Hogg, Aegon UK's director of industry development, said: "This shows why the Government has to build the new personal accounts to complement current provision, not to replace it or compete with it."
Steve Folkard, AXA's head of pensions and savings policy, said: "We support reform, but this work shows that avoiding damage to the prospects for today's savers has to be treated as seriously as the goal of helping the under-pensioned."
The Government said it disagreed with the survey's conclusions, but added it was keen to avoid damaging existing savings with its reforms.Reuse content