Disillusionment with Government’s pension policies is widespread among employers, according to a survey for the Association of Consultant Actuaries (ACA). It has found that 59 per cent of employers, including 86 per cent of smaller employers, are set to review their pension arrangements ahead of the introduction of auto-enrolment and personal accounts from 2012.
The survey found that 41 per cent of smaller employers will consider closing their existing pension scheme in favour of offering just personal accounts to all employees and 54 per cent are likely to revise pension benefits to mitigate the costs if, instead, they auto-enrol all employees into an existing scheme.
The survey found that to date only a third of all employers have budgeted for the increased costs arising from the reforms, with a figure of just 16 per cent for smaller employers.
The ACA survey found that compared to two years ago, far fewer employers expect to be able to meet the extra costs of auto-enrolment and personal accounts by increasing prices to their customers – just 7 per cent now, compared to 26 per cent in 2007. It also found 73 per cent of employers support proposals that above a certain size of individual pension ‘pot’, below which an annuity should normally be purchased to ensure State benefits are not claimed in retirement, retirees should not be constrained as to how they invest or use their pension savings.
ACA chairman, Keith Barton, says: “Whilst we support the Government’s ambition to encourage wider pension coverage through auto-enrolment and personal accounts, the survey highlights the complete absence of a coherent plan to support existing quality schemes.”