Stakeholder pensions could result in UK employers offering flexible benefits packages with the option of taking more holidays, according to UK pensions provider Scottish Equitable.
Commenting on the money purchase structure of stakeholder schemes, pensions development director at Scottish Equitable Stewart Ritchie said: “If an employee wanted to spend 1% of his or her salary on, say, extra holidays then the employer could permit this perhaps by reducing its contribution to the company stakeholder by 1%”.
Ritchie explained this flexibility would be difficult to offer on a defined benefit scheme as the calculation of the reduction in accrual equivalent to a 1% contribution would require complicated calculations based on assumptions on age, sex, salary rise, and inflation.
He believes that it is very likely that employees will in future be offered access to professional financial advice with the cost being absorbed either as part of the employee’s flexible benefits or by the employer.
By Janet Du Chenne
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