Pensions put pressure on pay packets
The relentlessly rising cost of running final salary pension schemes is causing more employers to squeeze the total wage bills of their staff, according to actuarial firm Aon Consulting.
Employers now have to make good any shortfalls in employees’ pension pots and, according to Aon’s figures, 49% of employers have raised staff contributions or cut related benefits on the basis of the pension advice they have received.
Aon also found that 48% of employers felt that this trend would continue as firms continue to struggle to make good the deficit in their schemes.
A spokesperson for Aon said: “It’s not just higher contributions. Companies are also clawing back money elsewhere, such as paying less money to new employees.”
To confirm these words, Marks & Spencer recently told its staff that they would have to begin making pension contributions for the first time since the firm implemented a pension scheme. The alternative was for their pension fund to build up at a much slower rate.
The pension advice that prompted this move was based on serious concerns about the £704m deficit in the M&S scheme.
Last December, the Pensions Regulator and the Pension Protection Fund warned that a small number of firms would find it “life-threatening” to improve the funding of their schemes.