THE GAP between pension scheme provision in the public and private sectors is widening, according to a new warning from actuaries.
While over five million government sector workers enjoy the benefits of “open” defined benefit schemes, such schemes are closing on private sector employees, the Association of Consulting Actuaries (ACA) will argue today.
Nine out of 10 defined benefit schemes are now closed to new entrants. Furthermore, a balance of six per cent of employers are planning on reducing their pension spend, the group’s survey shows.
ACA chairman Stuart Southall commented: “Inevitably any fresh initiative to boost pension savings will require both an easing in regulatory controls and, in all probability, new incentives to encourage employers and employees to take up the challenge and opportunities.
“A more level playing field between private and public sector pension provision is clearly a sensible aim,” Southall continued, “but it is possible that the current government attempts to achieve this have already been undermined by the seismic collapse of private sector pensions.”
A considerable 85 per cent of employers agree with Lord Hutton’s recommendation that government sector pensions should be scaled back, the survey shows. Meanwhile four in ten employers expect the average pension age to rise to 67 or older, within a decade.
The government’s auto-enrolment scheme is scheduled to begin in October of this year, yet little more than a quarter (26 per cent) of employers have budgeted for the additional cost, ACA says.