Leaked recommendations for a ‘Brit Saver’ national pensions plan, have met with a mixed response. Some say that it will mark the death knell for workplace arrangements, while others say such a recommendation, if eventually made by Adair Turner’s Pension Commission, would be a way of encouraging those on a very low salary to save more. Turner’s commission, which was due to report its findings on the future of the UK pension policy on November 30 (as Employee Benefits went to press), is expected to recommend a new national pensions savings plan similar to New Zealand’s planned Kiwisaver.
Employees would be automatically placed in the scheme when they start work but given the option to opt out. It is expected that the report will also recommend that contributions of at least 3% would be made by both employees and employers. But Christine Farnish, the chief of executive of the National Association of Pension Funds, has reportedly said that a Brit Saver would act a disincentive for employers to continue to provide workplace arrangements.
Donald Duval, chief actuary at Aon Consulting, said: "If the employer has to contribute then this is compulsion, at the option of the employee. This will increase labour costs, which will be difficult for many employers who are already struggling to compete with lower labour costs overseas."
But Graham Brown, pensions manager at Barnardo’s welcomes the recommendation: "The only people who will really have doubts about this are the life companies who stand to lose a great deal of business. But surely, anything that promotes saving for retirement must be applauded."
Turner’s report is also expected to recommend an higher state pension and an increase in the age at which employees will be able to claim their state pension from 65 years to 67 years.