June 20 2013 Latest news:
Adam Aiken, Editor
Tuesday, January 3, 2012
The government should aim for a “more level playing field” between public and private-sector pensions following a “seismic collapse” in private schemes.
That’s the message from the Association of Consulting Actuaries (ACA), which said the gulf between private and public-sector pensions is set to grow.
The association said about 90pc of final-salary schemes in the private sector had been closed to new entrants, and four in 10 had stopped existing members from making future final-salary contributions.
According to a study by the ACA, about 75pc of employers are likely to auto-enrol all employees into their existing workplace pension schemes, but a quarter of them are likely to review their existing pension benefits to offset the cost of having more members.
Perhaps unsurprisingly, about eight in 10 private-sector employers support the idea that public-sector pensions are scaled back and that member contributions should increase, while 90pc agree that the pension age for public workers should rise in line with the state pension age.
“Auto-enrolment, beginning in late 2012, should widen private-sector pension coverage, particularly where no pensions are offered at present, but the fact that recently the government had to delay its introduction for smaller employers because of the deteriorating economic climate is discouraging,” said ACA chairman Stuart Southall.
“Set against this, the government is at last waking up to the reality of how low morale is in the private-sector pensions world and we understand it is looking to produce a paper examining how workplace pensions can be ‘reinvigorated’.
“However, it is very difficult to see what can be done to turn the tide in the near-term given the austerity backcloth, coupled with the economic woes we are likely to face for a number of years to come.”
Mr Southall added: “Inevitably, any fresh initiative to boost pension savings will require both an easing in regulatory controls and, in all probability, new incentives to encourage employers and employees to take up the challenge and opportunities.
“The government needs to be bold in helping private-sector employers so they can consider new ways to boost pension savings over the mid to longer-term so public sector pensions are not ‘far better’.
“A more level playing field between private and public-sector pension provision is clearly a sensible aim but it is possible that the current government attempts to achieve this have already been undermined by the seismic collapse of private-sector pensions and, in both sectors, it seems probable that the later the cure, the stronger will have to be the medicine.”