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UK Employers May Face Additional Regulation Over Pension Provision

by Robin Pilgrim, LawAndTax-News.com, London

15 December 2004


In its report delivered to the Secretary of State for Work and Pensions, Alan Johnson, the Employer Task Force on Pensions warned UK employers that unless they voluntarily increase their involvement in the post-retirement income of their employees, the government may step in to enforce larger contributions.

Head of the task force, Sir Peter Davis explained that:

"In our discussions, it has become clear that an increasing number of people are beginning to consider compulsion. The Task Force wants the current voluntary approach to work. We believe employers have an opportunity to build on and improve the current framework in a way that makes sense for business."

However, he continued:

"But we realise that we are in the ‘last chance saloon’ for voluntarism. Unless we can reverse the current decline in adequate employer-led pension provision and deliver increased savings from both employers and employees through the voluntary framework, the Government will be forced to look at more drastic solutions."

The report found that 72% of employees with access to an employer’s pension scheme with an employer contribution are saving towards a pension, compared with just 21% of those who do not have access to an employer contribution. However, it also revealed that the average employer contribution to money purchase schemes is just 6%, compared with up to 20% for final salary schemes.


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