Employers still putting in to company pension plans

first_imgRelated posts:No related photos. Previous Article Next Article Ninety-five per cent of employers still make contributions to companypension schemes for existing employees. The Chartered Institute of Personnel and Development (CIPD) annual rewardsurvey polled 500 HR professionals, and not only found large-scale use oforganisational pension schemes, but also that many companies plan to increasetheir contributions rather than close pension schemes this year. The results, released at the CIPD’s annual reward conference in London lastweek, reveal that 87 per cent of employers make contributions to new employees’pension schemes. However, employers are changing the types of schemes on offer, with a markeddifference in the way that existing and new employees are treated. Nearly halfthe UK’s employers provide existing staff with a defined benefit (final salary)pension scheme. These schemes are often seen as the best form of pension provision, as theyare normally based on the salary at or near retirement and on length ofservice. Under defined contribution schemes, each person has an individual accountwhich is invested, and its value on retirement is used to provide the pensionbenefit. However, for new employees, two-fifths of organisations now offer a definedcontribution plan (also known as a money purchase scheme), with just a thirdproviding a defined benefit scheme. Charles Cotton, CIPD adviser, reward and employment, said most organisationssee the benefits that offering a pension scheme has on recruitment andretention. He said there is, however, a move from defined benefit to definedcontribution: “The shift has been around for a while, but has become morenoticeable because more companies are going down that path.” Of those planning to make changes to their existing pension arrangements,about 35 per cent plan to close final salary schemes to new employers in 2003. www.cipd.co.ukBy Quentin ReadePension arrangements for new employees% OFEMPLOYEES                           Senior                          middle/first                  non-manual                 manualnon-    management               management               non-management        managementDefined contribution/                             39                                42                                42                                43money purchase planDefined benefit/                                    35                                32                                32                                33final salary planPersonal pension                                   22                                21                                19                                18Stakeholder pension                             15                                16                                18                                16Hybrid (mixture of DC and DB)            2                                  2                                  2                                  2Source: CIPD Comments are closed. Employers still putting in to company pension plansOn 11 Feb 2003 in Personnel Todaylast_img read more