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EDITIONS
Thursday, 31 October, 2002, 15:21 GMT
Pension boost demand for workers
An elderly woman collecting her pension at a post office
16 million people know little or nothing about pensions
Workers should get financial advice funded by the government, the Association of British Insurers (ABI) has said.

It has also called for employers who contribute to a staff pension scheme to be rewarded with tax breaks.

The ABI has released details of its proposals for reform only a month before the government announces its plans to tackle the UK's looming pension crisis.

The insurance body wants employers who help their staff to get financial advice to receive an advice credit.

That would allow employers to receive a refund of their employer National Insurance contributions to fund regular advice sessions.

Employer contributions

The ABI has estimated that the provision of advice in the workplace could boost employee retirement savings by as much as 2bn ($3.1bn), at a cost of only 100m to the government.

And the ABI said that by continuing to contribute to staff pension schemes, employers could play a vital role in changing people's retirement saving habits.

Take-up of employer pension schemes is just 13% where there is no employer contribution but it rises to 69% when employers do contribute.

To help reverse the trend of employers closing their pension schemes or reducing contributions the ABI has proposed a new Pension Contribution Tax Credit (PCTC).

Under the PCTC small employers would receive a larger credit than large employers.

Growing crisis

The ABI's call for action came as new figures from IFF research and continental research outlined the depth of the UK pension crisis.

  • 16 million people are not confident that their income in retirement will be sufficient.

  • 9 million are less confident about their pension than they were a year ago.

  • 15 million say they know little or nothing about pensions, including almost a half of the under 35s.

In early November the government will outline its plans to reform UK retirement income provision in its pension green paper.

See also:

01 Oct 02 | Business
05 Jul 01 | Business
04 Jul 02 | Business
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