Other Citywire websites
Stay connected:

View the article online at http://citywire.co.uk/new-model-adviser/article/a647858

Pension contributions flatlining in smaller firms, survey finds

by Daniel Grote on Jan 02, 2013 at 08:11

Pension contributions flatlining in smaller firms, survey finds

Contributions into smaller firms’ pension schemes are flatlining, according to a survey from the Association of Consulting Actuaries (ACA).

The ACA said its survey of 344 firms with 250 or less employees showed that contributions levels into defined contribution pensions stand at 9% of earnings into trust-based schemes and 7.5% into contract-based plans. This is static from the levels found in the ACA’s last survey of the sector, conducted in 2010.

The survey also showed firms believed financial incentives, such as reducing national insurance contributions and red tape, were crucial to increasing contribution levels.

The ACA said the figures were ‘alarming’ given lengthening life spans and lower investment returns. It called on the government to raise the 8% contribution minimum level under auto-enrolment.

‘We hope the higher single-tier state pension reform will go ahead and provide a sustainable ‘core’ income in the years ahead, but on top of this we need to save much more than 8% of ‘band earnings’ for a comfortable retirement with less reliance on state support,’ said ACA chairman Andrew Vaughan.

‘I would like to see the government and opposition pledge to raise minimum pension contributions on band earnings to 10% by 2015 and 12% by 2020, but with pledges to cut national insurance, ear-marking reductions so they support extra private pension savings. If we do not increase these minimum contributions, then government ambitions to hold down state welfare costs are unlikely to materialise – indeed, the pressure will be in the other direction.’

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Long time coming: is the recovery here to stay?


Click here to watch a series of sponsored interviews with Jupiter's fund managers on the UK equity market.

Today's top headlines

More about this article:

What others are saying

Archive


Read more...

Barclays wins vote on remuneration

by Max Skjönsberg on Apr 24, 2014 at 16:18

Sorry, this link is not
quite ready yet