We are failing staff on pensions, admit world’s biggest companies

 

The world’s biggest companies have conceded that they are failing their staff when it comes to pensions, according to research published today.

The study, by the accounting giant PwC, is being released just days after the City watchdog said the UK’s pension system was “failing” and attacked the market for annuities, which people buy to provide income when they retire, as “disorderly”.

The two reports again illustrate the pensions crisis facing Britain, with an ageing population increasingly set for a retirement in poverty.

The research, which covered 114 of the world’s biggest companies that collectively employ 4.7 million people, showed that only 6 per cent are willing to continue with so-called defined benefit pensions, which guarantee a set income on retirement. But they recognised that the typical alternative of defined contribution schemes, where retirement income is dependent on investment returns, is failing.

While nine in ten companies said it is important they help employees to make “informed decisions” and 83 per cent said they plan to give “more flexibility” to staff, only 11 per cent and 15 per cent respectively think they are currently sufficiently effective at doing this.

Marc Hommel, global pensions leader at PwC, warned companies that “simply providing defined contribution arrangements for employees is not enough – current arrangements are delivering inadequate retirement savings and are not effective for the new world of work”.

He added: “Despite employers almost unanimously agreeing that education, empowerment and flexibility are essential ingredients in retirement benefits in the future, there is still a long way to go before this becomes common practice.”

The research found 83 per cent of multinationals are closing their defined benefit pension plans to new employees and 71 per cent intend to freeze accruals for their existing employees. This reflects the situation in Britain where a guaranteed defined benefit pension is now all but a thing of the past outside the public sector.

Last week a report by the Financial Conduct Authority found that 80 per cent of people failed to get the best deal when buying an annuity and that the industry is closing its doors to those with smaller pension pots. The watchdog is set to conduct a study to assess competition in the market, with possible remedies likely to be published within 12 months.

The Government has sought to address the pensions issue by introducing auto-enrolment into workplace schemes and trailing what it calls a “defined ambition” pension scheme, a hybrid popular in Denmark and the Netherlands. But critics have argued that these are complex and may not do much to alleviate the situation.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
Season's finale brings the end of an era for top coaches and players across the continent

The end of an era across the continent

It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

'Focus on killing American people'

Released Bin Laden documents reveal obsession with attacking United States
Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

Medécins Sans Frontières's life hacks

The innovations of volunteers and medical workers around the world are helping the charity save people
Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

Same-sex marriage

As date looms, the Irish ask - how would God vote?
The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

The Mafia is going freelance

Why the underworld model depicted in The Godfather is no longer viable