UK - Research showing one in four employers would "level down" their pension contributions once personal accounts are introduced has given weight to fears that the National Pension Savings Scheme (NPSS) will eat into sound pension schemes.
A survey conducted by Deloitte and published by the Association of British Insurers, revealed the relatively widespread possibility of employers reducing their pension contributions to the minimum levels required.
This would result in lower pensions for around 2.4 million employees.
Work and pensions secretary, John Hutton, claimed the new package of reforms will support any quality existing pension schemes by reducing regulation.
"The system of personal accounts needs to be focussed on its target market. They are designed in order to fill a gap in the existing market, not substitute it," he claimed.
National Association for Pension Funds (NAPF) CEO, Joanne Segars, stressed designing personal accounts for the target group and supporting sound existing schemes could prevent the leveling down.
Earlier this year, the NAPF had warned occupational pension schemes could lose out on around £5,000 per year in employer contributions due to employers cutting back their contributions.
According to Hutton the reduction of regulatory and administrative burdens will help buttress the sound schemes and simplify the system for both employers and pension providers.
The ABI said the NPSS would need to pass five tests to assess whether the system would improve on the current situation. An increase in savers and saving, competition and delivery were all highlighted.
In this week's Pensions Buzz, we want to know whether or not you believe that business facing financial distress should be able to suspend their auto-enrolment contributions to avoid rising costs.
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