Pensions News

Personal account prospects 'not black and white' - 14/01/2008

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Advisers have mixed feelings about the prospective personal accounts pensions system, a new study suggests.

Scottish Life conducted a poll on the BeeHive website to which 87 per cent of respondents voiced the opinion that personal accounts would result in a levelling down of employer contributions or in some cases scheme closure.

Meanwhile, 13 per cent of those polled disagreed with this assessment, feeling that decreased contributions would not necessarily result from the introduction of the compulsory pensions saving scheme.

Comments from respondents varied, however, with some maintaining that the extent of levelling down would vary according to firm size, while those companies offering non-contributory benefits were deemed by some unlikely to change following personal accounts' launch.

One respondent compared the situation to the introduction of the minimum wage, pointing out that employers did not reduce wages when that piece of legislation was introduced.

Steve Bee said: "It's clearly not a black-and-white issue and whether or not levelling-down happens as a result of these reforms may depend, at least in part, on how employers and their advisers react to events."

He added that, while some respondents thought levelling down was inevitable, optimism about the ability of advisers to stop the pensions system "dumbing down" could also be discerned.

Des Hamilton, technical director at The Pensions Advisory Service, forecasts the end of final salary pensions as defined contribution schemes prevail.

© Adfero

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