Wed, 24 Aug, 2016
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Employers grapple with pension deficits

A new survey of company financial executives has shown half of them agree that their company defined contribution (DC) pension schemes are not providing their employees with good retirement provision.

The survey, by Fidelity International, came along with a white paper on defined benefit (DB) contributions, showing that around 6.9 per cent of salary costs went into pension provision but this money was not speared evenly among the workforce.

According to the survey of 100 leading companies, representing ten per cent of the UK workforce, 35 per cent of employees were in DC schemes and 22 per cent in DB programmes.

Simon Fraser, president of institutional business at Fidelity International, said that finance directors were in an "invidious position".

However, he said, companies were working to try to balance cost to the company with the attractions of offering employees a pension scheme rather than abandoning the schemes.

The inadequacy of many pensions comes at a time when private pension activity is at its lowest level since June 2004.

According to information services provider JGFR, the levels of pension activity are down from 55 per cent of adults making regular contributions a year ago to 43 per cent now, Firstrung reports.

It blames high inflation, taxes and utility bills, particularly rising energy bills, for the situation.