PracticeAccounting FirmsStaff risk low pensions under new schemes

Staff risk low pensions under new schemes

Many UK employees face 'lean retirements' if they continue to make low contributions to their defined contribution schemes, research by KPMG Pensions has revealed.

Combined contributions from company and staff to defined pension contribution schemes currently total 10% or less of an employees salary – with nearly half of companies who offer such a policy adding less than 5% to the employees pot.

This means that pension income could be as much as one-third lower than under final salary schemes.

David Fairs, partner at KPMG Pensions, said it was vital that employees made ‘much higher levels of contributions and are aware of the risks in not doing so’.

Fairs said more and more companies were closing down their final salary schemes and switching to defined contribution schemes because they made ‘good business sense’.

A major factor in companies choosing defined contributions schemes was an attempt to keep costs down, with the controversial new accounting standard FRS17 seen as a key issue, KPMG found.

Fairs added: ‘The volatility of costs and the potential impact of FRS17 mean that the days of the final salary pension scheme look numbered.’

Related Articles

Sexual harassment – is accountancy next for #MeToo?

Accounting Firms Sexual harassment – is accountancy next for #MeToo?

3d Karen Baxter, Lewis Silkin
Johnston Carmichael CEO appointed as ICAS president

Accounting Firms Johnston Carmichael CEO appointed as ICAS president

4w Emma Smith, Managing Editor
British Accountancy Awards 2018 – entries open!

Accounting Firms British Accountancy Awards 2018 – entries open!

1m Emma Smith, Managing Editor
Is the accountancy sector facing an international talent crisis?

Accounting Firms Is the accountancy sector facing an international talent crisis?

1m Lewis Silkin
RSM appoints new Chief Operating Officer

Accounting Firms RSM appoints new Chief Operating Officer

2m Alia Shoaib, Reporter
RSM announces 11 partner promotions

Accounting Firms RSM announces 11 partner promotions

2m Emma Smith, Managing Editor
BDO hires former AstraZeneca creative director as head of digital and innovation

Accounting Firms BDO hires former AstraZeneca creative director as head of digital and innovation

2m Emma Smith, Managing Editor
What does the future hold for listed accountancy firms?

Accounting Firms What does the future hold for listed accountancy firms?

2m Fergus Payne, Lewis Silkin