UK - Employers levelling down scheme provision following the introduction of auto-enrolment will only confirm negative perceptions of pensions, Iain Duncan Smith warns.
The Secretary of State for Work and Pensions Iain Duncan Smith told attendees at an event last night there was a risk that pensions were becoming a "discredited brand".
He said the simplification of the state pension and auto-enrolment - which will mean millions more people saving in workplace pensions for the first time - would help counter this risk.
But he warned auto-enrolment was not an invitation for employers to level down.
Duncan Smith said: "From 2012 every employer will have to enrol their employees into an eligible pension scheme, helping to bring back a savings culture to Britain.
"This initiative heralds a real tipping point for pension provision. We hope that it will act as a stepping stone for employers to go further and faster in providing quality pensions."
But he warned: "If some level down, they will only confirm negative perceptions of pensions."
The National Association of Pension Funds also urged employers to maintain the standards of their DC schemes.
Chief executive Joanne Segars said: "The auto-enrolment reforms due in 2012 are good news as they will nudge many workers into saving for their retirement.
"However, it is vital that employers continue to play their part in helping address the pensions saving crisis that the UK is facing, and that they don't fall into the temptation of ‘levelling down' their pension to match the statutory minimum requirements of the new law."
This comes the day after the Pension Quality Mark initiative - set up by the NAPF - celebrated its first anniversary.
The quality mark recognises DC schemes which meet certain standards and set levels of contributions - 10%, with a minimum employer contribution of 6%, for PQM and 15%, with minimum employer contribution of 10%, for PQM Plus.
Segars said: "Our PQM initiative encourages us to believe that employers understand the key role they can play in helping workers save for their retirement, and it could help guard against levelling down.
"We hope that more will follow by applying for the pensions industry's mark of excellence to make their commitment to the pensions saving crisis crystal clear."
Some 80 schemes - covering over 155,000 workers -have been awarded the PQM standard since its launch. Among the latest joiners are Capital One, Centrica and Roche. Other organisations to hold the PQM include Marks & Spencer, Michelin, Accenture and Volkswagen.
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