NPSS gives 3 company pension choices, expert says

Tue, 06 Jun 2006

Employers have three choices to amend company pensions with the introduction of the National Pensions Savings Scheme (NPSS), according to an analyst.

Adrian Boulding, the pensions strategy director for Legal and General, makes the comments in the latest edition of Driven to Retirement.

Options available to companies are to add auto-enrolment onto an existing company pension scheme, which would almost double the organisation's pension bill, which Mr Boulding does not believe is likely.

Another option is to introduce auto-enrolment on company pensions, but reduce contributions to national Pensions Savings Scheme level, which Mr Boulding describes as potentially a "very sad" idea.

Alternatively, employers could adopt an "offset model", as Mr Boulding explains: "They maintain their existing scheme but without adding the auto-enrolment."

"They just change their scheme rules to say that where they are also required to pay a contribution to National Pensions Savings Scheme, they will reduce the contribution to their own scheme accordingly," he added.

However, Legal and General believes that many staff would be better off not joining the scheme, such as people with debts and those on low income who face means-testing.

Auto-enrolment onto the National Pensions Saving Scheme is part of the government's reform, along with raising retirement age to 68 in the future and restoring a link to earnings.

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