Half of delegates at the Employee Benefits Pensions and Workplace Summit 2012 will consider slashing their benefits budgets because of auto-enrolment.
Pension provision cuts are a consideration for almost a quarter (24%) of the leading benefits and reward professionals polled at the summit, taking place at the Four Seasons in Hampshire, though most confessed to only being at the early stages of preparing for the pensions regime change due to start later this year.
A number of delegates raised concerns about affordability and the extent to which they would be able to maintain their current pension scheme contribution rates once all employees had been auto-enrolled.
One delegate revealed that they were in the throes of considering a new, reduced contribution rate for low earners, to enable them to remain enrolled, insisting that the proposal was not a means of reducing her employer’s pension scheme funding obligations.
However, one leading pensions commentator on the panel said: “Employers have got to stay in business, but the kind of funding level we were paying in to defined benefit (DB) schemes we’d like to see employees have. If it’s not in double digits, it’s not enough.”
The debate kicked off a panel session featuring a line up of leading pensions commentators, including Richard Bartlett, assistant director distribution for the National Employment Savings Trust (Nest), David Pitt-Watson, author of Building the consensus for a People’s Pension in Britain and Mike Buckinghamshire, chairman of the board of trustees for Barnardo’s Pensions Scheme.
The panel was unanimous in its belief that auto-enrolment provided a great opportunity to rebuild Britain’s pensions market. Pitt-Watson said: “The system was the pride of Britain historically, like the BBC, but it has been slipping through our hands like sand.”
He added that in future the pensions market needs to ensure it covers everyone, looks at the future of DB pensions and preserve some of the benefits because they are being eroded. He said: “If we don’t get people into the pensions system, we don’t have another alternative in the UK.”
He added that auto-enrolment needed to be “open” and “transparent” to maximise the regime’s success.
Pitt-Watson agreed: “We’re at a really important point in the history for Britain right now. We’ve had 20 years of decline in pensions. This is the first step of putting trustworthy pensions in place.”
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