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NU urges tax aid as firms axe pensions

Norwich Union is urging the Government to introduce tax credits to firms offering pension schemes after finding that an alarming number of private companies are planning to shut down schemes.

It is calling on the Government to act after its research of 1,000 firms last month found that more than 10 per cent of employers plan to close their defined-benefit schemes to new and existing members by 2004.

Twenty-three per cent said they were likely to block new staff from joining schemes within two years while another 23 per cent said they had already done so.

Seventy-four per cent of firms said it should be the Government&#39s responsibility to make up retirement income shortfalls.

NU believes the only way to arrest this slide in commitment is for the Government to introduce a system of tax credits for employers, which would be dependent on the firm&#39s financial commitment to a pension scheme or its level of take-up.

The company believes this would encourage staff to save for their futures and move them away from salary demands to pension benefits.

NU also wants the Govern-ment to tweak the tax system so that there is more inc-entive for employers to make contributions rather than raise salaries.

Head of corporate pensions Iain Oliver says: “The Government will not make inroads into the so-called savings gap unless it can persuade private sector employers to offer a significant financial commitment to their pension schemes.”

Informed Choice managing director Nick Bamford says: “If NU really wanted to make a real contribution to the debate, they might want to call on the Government to stop robbing pension funds.”

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