New pension scheme could cut company pensions, expert warns

Fri, 08 Sep 2006

The government's recent reforms on pensions could lead to many employers cutting their contribution to company pension schemes, an expert has warned.

Introducing the National Pension Savings Scheme should not make it more difficult for employers to create company pensions, claimed Scottish Widows.

However, Scottish Widows did state that the new personal accounts that are set to be introduced "offer a real opportunity to fundamentally increase levels of private sector savings".

Ian Naismith, head of pensions market development at Scottish Widows, commented: "To be successful, personal accounts must deliver genuine increases in savings levels amongst current non-savers.

"However, there is a real danger that they could have unintended consequences, which could include reductions in current levels of employer sponsored provision and substitution of current savings vehicles."

Mr Naismith continues a reform of state pensions must deliver a fairer, simpler and less mean-tested system.

The Association of British Insurers recently asserted that the industry is "enthusiastic" about personal accounts, as they have the potential to boost the levels of contribution to savings.


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