UK - Employers are being urged to provide scheme members with projections of their pension entitlements before the April 2005 deadline in order to avoid a "backlash".
Consultants say the individual pension statements could cause panic among members unless they are forewarned.
Statutory money purchase illustrations will be issued to members of occupational money purchase schemes, personal pensions and stakeholder pensions and will detail how much each member is likely to receive at retirement.
The projections are likely to be lower than expected because they will calculate the value of each member’s pension in real terms, allowing for inflation.
Mercer European partner Nick Throp said firms which explain the new measure and why the calculations are lower could avoid mass confusion from April 2005.
He said: “If staff are not warned about what to expect they may panic when the illustrations arrive.”
“The key is to engage the workforce now; explain what the illustrations mean, and why the new amounts may appear lower than last year’s.”
Members of final salary schemes will also receive an illustration if their arrangement includes money purchase-based additional voluntary contributions or contracted-out protected rights funds.
More than one party may issue statements to members in respect of different sections of their pension fund.
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