Employers urged to re-think pension cuts

As the credit crunch continues to bite and employers increasingly look to cut costs by closing pension schemes, Friends Provident is urging employers to limit the impact of this sharing of risk and ensure employees are not forced to take on more responsibility for financial security in retirement.

The lure of particular employee benefits changes with age, and the emphasis is steadily increasing over time to focus on pension schemes. Over two thirds (69 per cent) of employees aged over 50 would select an employer contributory pension scheme as their favoured benefit. Many employees are looking for long-term support ahead of short-term financial gain. Research released from Friends Provident found that one in five (20 per cent) British workers have turned down a job due to the unattractive benefits offered, including pensions.

With people living longer than ever the onus is on employers to provide adequate pension schemes or it could lead to the ‘death' of retirement as we know it. If this prediction comes true future employees will be forced to work past the national retirement age (currently 65, but rising to 68) to provide a "decent" standard of living.

Respondents to Friends Provident's survey estimate that £832 a month is a realistic amount of money needed to live on comfortably. This figure does not allow for mortgage repayments or rent. It is also expected to increase even more if inflation rises during the course of retirement. Without an employer pension or private pension people will have to rely on the state pension, which currently would provide £412.75 a month - less than half of the above figure.

Martin Palmer, head of pensions marketing at Friends Provident said: "In these challenging times we are urging employers to recognise what workers in the UK want and to look further down the line when reviewing the role attractive pensions offerings have in attracting and retaining their staff.

"A pension is a very important benefit and will continue to have a major impact later on in an employee's life. A good company pension scheme could be the difference between today's employees living a comfortable retirement tomorrow, or living close to the poverty line."