Employees with workplace pension schemes could lose out when employers adapt to new pension rules, actuaries have warned.
From October 2012, employers will have to auto-enrol all employees into company pension schemes unless they specifically opt out. This will extend the schemes to millions of extra employees and will be phased in over four years.
Employers will have to contribute one per cent of a worker’s salary, rising to three per cent in 2017. Currently, employers contribute an average of six per cent of employee’s salaries into pensions.
According to the Association of Consulting Actuaries (ACA), two-fifths of large private and public sector employers say they are “likely” or “highly likely” to level down to meet the additional cost. The pension pots of existing members would therefore be reduced to make up for the cost of the new ones.
An ACA survey of 210 large employers, with combined pension scheme assets of £166bn, found three-quarters of employers supported the principle of auto-enrolment, but 70% felt the auto-enrolment regulatory regime “appears complex”.
Three-quarters thought employees with less than three months’ service should be excluded from the
