A survey conducted by Fidelity International has revealed that half of the employers who took part in the survey acknowledged that their pension schemes not adequate enough to provide a comfortable living when employees retire.
100 senior executives of UK companies took part in the survey and the majority said that they remained committed to providing pensions for their workers. On average, when spread across the entire workforce, including those not in pension schemes, pension provision represents 6.9% of salary costs.
According to the BBC, firms that offered a pension based on investment performance over final salary had the least adequate pensions. Over the past few years, many companies have replaced lucrative final salary schemes, which pay a pension based on final salary and length of service, with a cheaper money purchase plan, resulting in lower employer and employee contributions.
Simon Fraser, president of institutional business at Fidelity International, said: Higher contribution rates do not automatically mean that employees enjoy superior retirement benefits: companies may simply be making good deficits. That said contribution rates remain a reliable yardstick of the quality of an employer’s commitment to pension provision.
As cited by the BBC, it is estimated that 12 million Britons are not saving enough for when they retire.