Employers 'wary of Pensions Act'

The government is keen to avert a future pensions crisis

Most employers - almost two thirds - believe last year's Pensions Act will reduce the level of pension provision in the workplace, a report says.

Most think it will add to the cost and bureaucracy of running schemes, say the Association of Consulting Actuaries.

The report also warns against forcing employers to contribute to a pension, saying this would have to be offset by a reduction in tax.

The government says the Act will boost confidence in pensions.

Ministers believe the legislation will simplify regulations and cut the cost of running a scheme.

But the report suggests that many employers believe the opposite will be the case.

The thinking behind tough new regulations may be well-meaning, but this short-term approach can only damage ongoing pension provision Adrian Waddingham ACA Chairman

Researchers found that 80% of companies felt the Act would increase the cost and red tape involved in running a pension scheme, therefore reducing company pension provision.

Commenting on the findings, ACA Chairman Adrian Waddingham said: "Increasingly, we are worried that the delayed Scheme Funding regulations may place further harsh funding pressures on employers, thereby speeding up scheme closures.

"The thinking behind tough new regulations may be well-meaning, but this short-term approach can only damage ongoing pension provision and undermine employers' desire to offer good schemes."

The ACA also thinks a higher state pension would be better than forcing companies to contribute to pensions.