UK Group Says Pension Proposal Could Undermine Generous Employer Contributions
The National Association of Pension Funds (NAPF), which
represents employer-sponsored pension schemes, said
Thursday that the government’s plan to enroll millions of
workers in a national pension savings scheme (See
UK Issues Formal Pension Reform
Proposal
) should not be offered to workers who already have access
to a pension where there is already an employer
contribution.
Under the national pension savings scheme – part of the
plan to reform UK pensions – contributions from both
companies and workers would be required starting 2012. The
proposal recommends employees earning up to 33,000 pounds a
year should contribute 4% of their wages to the plan, with
their employer contributing 3%. The government would add 1%
through tax relief.
“There is a risk … that if the personal accounts scheme
is poorly targeted the many millions who are currently
saving in today’s high-value workplace schemes may receive
smaller pensions,” the NAPF said in a paper at its annual
investment conference in Edinburgh, according to the
Guardian. According to NAPF, UK ministers said last year
the scheme could be extended to cover up to 10 million
workers without a pension, but the group is suggesting that
figure be scaled back to 7.5 million workers and exclude
those with existing schemes.
The group further warned that if the proposal is passed by
Parliament, employers offering good pensions today could
“choose to place new recruits and/or existing employees who
are not currently in their scheme into personal accounts at
a lower contribution level than is presently the case.”
The press release from NAPF is
here
.