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Friday, 15 November, 2002, 00:05 GMT
Pension schemes 'under threat'
A female manufacturing worker
Employees could find their pensions under threat
Nearly a third of occupational pension schemes could be under immediate threat, according to a survey.

The Association of Consulting Actuaries (ACA) found that the cost to employers of maintaining a pension scheme had increased dramatically over the last year.

As a result, it found that many employers are looking to cut back on the pensions they offer their employees.

In fact, just under half of all final salary schemes operated by the employers surveyed are now closed to new entrants.

Employer costs

The survey will be a further blow to the government, which is keen to encourage private and occupational pension provision, and unions, who are looking to protect members' benefits.

The ACA quizzed 330 firms, employing 1.8 million people.

Of these firms, 32% said that they were currently reviewing their occupational pension arrangements.

Alarmingly, costs to employers of maintaining schemes had risen by 14% during the last year.

With stock markets falling, employers have found that they have had to pay more into their employees' schemes in order to ensure that members obtain benefits.

Among employers with final salary schemes the level of subsidy is higher still - the amount paid in has increased by a dramatic 17.8% during the last year.

As a result, many final salary schemes operated by employers surveyed have closed their doors to new members.

Incentives

In order to address the worsening pension situation the employers surveyed wanted a 'lighter touch' from pension regulators.

Recently, the Occupational Pensions Regulatory Authority (OPRA) was severely criticised by the National Audit Office for taking action against firms for 'trivial' breaches of pension law.

In addition, firms told the ACA that the government's pensions green paper, due out in December, should include tax incentives for employers who keep paying into their employee pension schemes.

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Gordon Pollock, Association of Consulting Actuaries
"Companies do point a big finger of blame at the Chancellor"

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See also:

11 Nov 02 | Business
06 Nov 02 | Business
01 Nov 02 | Business
26 Oct 02 | Moneybox
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