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Actuaries find 40% of big firms could level down

The Association of Consulting Actuaries has warned there is still a significant threat of employers levelling down existing pension arrangements due to auto-enrolment despite the Department for Work & Pensions recently releasing research downplaying this risk.

Last month, the DWP released survey results showing that 94 per cent of employers contri-buting at least 3 per cent say they will maintain or increase levels for existing members.

However, research by the ACA, looking specifically at bigger employers, found that 41 per cent are considering levelling down existing arrangements.

In its findings, the ACA points out that the DWP’s findings were based on research conducted in the summer of 2009 and mainly covered smaller employers. The ACA’s survey was conducted in July and August this year.

The ACA points out that the DWP survey found only one in 10 employers in its sample already ran schemes meeting the minimum contribution requirements of the forthcoming ref-orms and that the scope for levelling down pensions among smaller employers is therefore very limited, particularly as two-thirds of employers do not currently run a pension scheme.

The ACA says: “The DWP survey finding that ’most employers already making pension contributions of 3 per cent or more expect to maintain or increase their level of contribution when they have to provide pensions for all their staff’ therefore only relates to those one in 10 employers.”

The DWP says its own res-earch consisted of a nationally representative quantitative telephone survey of around 2,550 private sector employers across a range of sizes and industries. It points out that the ACA’s survey of 210 big private and public sector employers was via an online survey.

Standard Life head of pensions policy John Lawson says: “Large employers with contributions that are well above the 3 per cent mark are likely to level down.”


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