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Pensions
The provision of pension benefits is proving to be one of the greatest challenges to society in the 21st century. Advances in living standards over the past 50 years have meant that more of us expect to receive a decent retirement income when we retire. Yet we are living longer in retirement and - as a consequence - our retirement benefits have become more and more expensive to provide. For over a decade now, both governments and private businesses have been feeling the strain of having to fund these benefits and many have sought to scale down their commitments with a resulting deterioration of pension benefits on the part of their members.
The reluctance of employers to shoulder massive and unpredictable pension burdens is entirely understandable in financial terms, even more so given the effects on all sectors of the economy of the global financial crisis. But if we have to accept that pensions benefits will no longer be as generous and available as they were not so long ago, what does that mean for our investment options as individuals, for our consumer spending decisions, for employer-employee relations, and for the long-term role of the state in providing welfare benefits? These questions are wide-ranging and inter-connected and are likely to have a direct affect on the lives of each of us. The financial connotations of pensions for their providers and beneficiaries mean that they are increasingly likely to feature in the work of accountants, whether they work in public practice, business or the public sector.
These pages carry information intended to keep members' informed of relevant developments and issues in this important area.
DWP proposes to defer introduction of mandatory auto-enrolment
24 September 2009. The DWP has proposed that the introduction of mandatory auto-enrolment under the Pensions Act 2008 be defered from the orginal target date of October 2012. Instead, the requirement will be brought into effect in stages between 2012 and 2016, with large employers affected fits and the smallest businesses last. At the same time, the contribution requirements will also be brought in in phases, with, initially, a combined 2% requirement, leading up to the full 8% by 2016.
ACCA RESPONDS TO DWP PROPOSALS ON WORKPLACE ISSUES
ACCA has made a submission to the DWP on its draft regulations covering employer responsibilities in relation to the new pensions arrangements which will come into effect under the Pensions Act 2008. ACCA welcomes the fact that, in some respects, efforts have been made to reduce the scale of employer burdens. It remains, however, that employers, especially SMEs, will be faced with material increases in costs and administration. ACCA calls on the DWP to consider additional measures that it could take to reduce these burdens. The DWP's proposal to introduce the new employer responsibilities in stages, based on employer size, is welcomed. But ACCA believes that there should be no phasing in of the size of employer contributions: the 'ultimate' level of contributions should be applied from the time that an employer is first made subject to the requirements.
View the response.