UK - The pensions industry has expressed disappointment over aspects of the Pensions Bill released yesterday, claiming it fails to address deregulation and places higher cost and time burdens on pension schemes.
The Personal Accounts scheme due to be introduced in 2012 will affect workers, including temporary and part-time staff, earning between £5,035 and £33,450 a year. It will force employers to contribute at least 3% of earnings.
Commenting on the Bill, Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), said: "The measures to ease the regulatory burden on occupational pensions are an important first step in helping to secure the future of this vital part of retirement provision."
She warned that Personal Accounts should not replace the existing pension system and said there was still a lot of work to be done on the details of the Bill to ensure this.
Jane Beverley, principal and head of research at Punter Southall expressed her dismay: "This is not a Bill to restore confidence in UK defined benefit schemes. [It] contains very little in the way of deregulatory measures. It is very disappointing that the many measures considered by Ed Sweeney and Chris Lewin should have been ignored by government."
Andrew Tully, marketing technical manager of Standard Life Assurance, said the 2.5% revaluation cap would "see deferred benefits slashed in real terms" and warned about the effects of inflation causing more damage to retiree incomes. According to the government's own figures, some £4.4bn will be cut from the benefits of early retirees through this change.
A spokesperson for the Trades Union Congress (TUC) said the union was "disappointed" with the decision to impose the 2.5% cap.
Marc Hommel, a partner at PricewaterhouseCoopers, warned that the administrative burden the Bill would place on companies would be translated into considerable costs for even the best schemes.
"These employers will need to find the money from somewhere and other aspects of the business or workforce remuneration may suffer," he added.
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