DSS threat to small business
Finance directors of smaller companies could be forced to scrap occupational pension provision if the government pushes through its proposed stakeholder scheme, benefit consultants have warned.
Consulting actuaries Punter Southall principal Steve Leake said: ‘Finance directors in the top 200 companies have indicated to us that they will review whether to continue with their existing arrangements, or provide something simpler.’
This could involve lowering contributions to occupational schemes or, for smaller companies, scrapping occupational schemes altogether, he said.
The costs of administering a company programme could be punitive under social security secretary Alistair Darling’s plan that every employee has access to a stakeholder pension if they are not eligible for an occupational pension.
This is alongside the added complexity of introducing a new pension – with its own tax and ownership regulations – which prevents employees from holding occupational and stakeholder pensions at the same time.
Newton Investment Management finance director Russell Vaizey said: ‘There has been a lot of concern from the industry that the public could purchase investment products from outlets such as supermarkets because this could open up opportunities for misselling.’
Other industry insiders expressed concern that companies could effectively cut pension provision in response to the government’s efforts to boost awareness about the importance of financial provision during retirement.