The general election's outcome will make no difference to UK pensions policy, according to the majority of employers responding to a survey published today by consulting actuaries and administrators, Punter Southall.
Nearly 9 out of 10 employers with workplace pensions expect a change of government at the forthcoming general election, but the majority (57%) expect this to have little or no impact on pensions policy, and only 13% think it would have a positive impact.
In one of the biggest surveys of DC pensions in the UK*, Punter Southall found that, while 36% of respondents favoured the Conservative Party proposal for a lifetime savings vehicle, 41% remained unconvinced. Respondents were also broadly hostile to the government's proposed tax changes for higher earning pension savers, and a significant proportion are yet to be convinced of the advantages of new employer duties, to be introduced from 2012.
The survey identified a marked disenchantment with the efforts of policy makers. One respondent urged government to "stop mucking about with pensions legislation", while another complained that "they cannot leave pensions alone".
Commenting on these findings, Head of Corporate DC at Punter Southall, Damian Stancombe said:
"Politicians on all sides have clearly failed to convince UK plc that they have adequately addressed the challenges facing our pension system. Our view is that these issues must be de-politicised. The focus must be on solutions and reaching consensus on the future, so that improvements can be made that will persist in the face of changing governments.
"The baby boomer generation has fared pretty well from pensions in the UK and will be the last to fully benefit from final salary pension schemes. Generations X, Y and beyond now need effective and enduring measures from our country’s leaders to help them avoid a bleak future."
"The framework put in place must allow and encourage saving in a simple tax efficient environment, within durable limits. The move towards auto-enrolment has the potential to form part of the solution, but needs clear thinking and a consensus among all stakeholders."
Other key findings from today's survey include:
- 94% of companies now use a defined contribution arrangement as their primary pension scheme
- One in four employers report employees have cut or suspended pension contributions in the face of the economic downturn
- 92% of respondents believe that the responsibility for retirement saving rests primarily with the employee
- 92% of respondents believe companies should undertake regular scheme reviews
- 89% of respondents believe that benefits are appreciated, although only 7% of companies have undertaken a survey to assess this
- 70% of schemes have at least 70% of members in the default investment option
- 55% of companies use salary sacrifice for pension contributions
*"DC Pensions in the UK Workplace" received responses from a diverse range of over 330 UK employers, including 24 FTSE100 companies, with workplace pension provision. The findings include respondents' views on the importance of saving, scheme design, investment, communication, governance, employer duties on auto-enrolment, high income individuals, the credit crunch and the wider welfare debate. Fieldwork was conducted in December 2009 – January 2010.
Ends
For media information related to Punter Southall, please contact:
Penrose Financial
Gay Collins/Andrew Fleming/André Flemmings/Clare Murphy-McGreevey
020 7786 4882/4823/4811/4834
Trustee training - Pension scheme investment (September 2010)
