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Firms plan to cut NPSS payments for new staff

The introduction of pension personal accounts could see 80 per cent of employers reduce contributions for new staff.

A survey of 750 employers by Deloitte and sponsored by Standard Life, Scottish Widows, Aegon and Axa found the Government’s plans for an NPSS-style pension scheme is likely to result in a reduction in corporate provision.

Total employer contributions are expected to drop by 10 per cent over the first 10 years of personal accounts and Deloitte predicts that employers will only sustain contrib- utions at their present levels for current employees.

Standard head of pensions policy John Lawson says: “Levelling down is a process, not an event. As people move jobs, they move from being members of a good scheme to new starters who get a lower contribution from their employer.”

Scottish Widows head of pensions marketing Jim McAffrey says: “It is essential to ensure that personal accounts are designed in such a way to increase overall savings and reach their target market. There is a clear risk of increasing the number of savers at the expense of existing savings levels.”

Aegon director of industry development Ken Hogg says: “This shows why the Government has to build the new personal accounts to complement current provision, not to replace or compete with it. They should become an addition to the pension landscape for those who are not saving and particularly those who do not have access to workplace pensions schemes.”

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