Pension contributions decrease during recession

Almost half (45%) of independent financial advisers (IFAs) have seen a reduction in pension contributions among employers during the recession.

According to Aegon’s latest IFA Insights research, which interviewed 100 IFAs that deal with corporate clients, 45% have also seen increased use of salary sacrifice arrangements around pension contributions.†

A further 60%, meanwhile, said the current economic climate has caused a decrease in the number of defined benefit pension schemes.

The research, which also asked about changes IFAs had seen in flexible benefits provision as a result of the economic climate, also found that 34% have seen a cut in private medical insurance (PMI) and 25% have seen an increase in the use of cheaper, softer benefit options, such as retail vouchers, counselling and gym memberships.

Neil Davies, head of corporate marketing at Aegon, said: “In tough economic times, it is understandable that firms look to reduce costs, but a potential result of employers cutting pension contributions will be that their staff will have to work longer to fund their retirement, and not necessarily out of choice.”

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