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Axa hits out at Amex suspension to pension contributions

Axa has hit out at American Express’ decision to suspend pension contributions into its UK stakeholder scheme, warning the move will be more detrimental to the personal wealth of its employees than other measures.

As revealed first by Money Marketing on Wednesday morning, the largest US credit card company suspended contributions to its UK stakeholder plan from July 1 in a bid to cut costs and maintain profitability in the challenging economic environment.

Axa Life’s Mark Rowlands believes the move could be harmful to the long-term wealth of employees.

He says: “While it may feel more palatable today for employees for their pension contributions to be reduced, it is actually much more harmful to their long-term wealth.”

Axa carried out research in late 2008 into the effect of a two year pension break. It revealed that a 28 year old contributing £300 per month into an individual stakeholder pension could be £59,7000 worse off at retirement if they took a two year pension holiday.

Rowlands says: “The point of a pension is to provide someone with enough money to retire with a lifestyle that they choose, based on how much they invest over their career. Regular payments, from early in someone’s career, make this more achievable.”

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