New rules could shrink pensions
Staff who pay into their company pension schemes may be forced to increase their contributions because new rules introduced by Labour will lead to employers paying less for each member.
The new rules, which will come into effect in 2012, mean employers have to enrol every member of their workforce into a company pension scheme unless workers specifically opt out.
According to a report in the Daily Telegraph, 41 percent of the 210 biggest employers said this will force them to reduce the contributions they make for existing members in order to pay for the cost of enrolling new ones.
It quotes a study by the Association of Consulting Actuaries which said some employers could cut their contributions in half, leaving members to make up the shortfall or face a serious drop in the value of their pensions.
The report said middle income workers will be the worst affected as these tend to be enrolled in company schemes already, while lower paid workers tend to rely on state pensions.
Under the new ‘auto-enrolment’ rules, companies only have to contribute the equivalent of one percent of a worker’s salary, rising to three percent in 2017. Currently, employers contribute an average of six percent, but this is likely to drop as they spread their pension pot across a larger workforce.
By Linsey McNeill
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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