CIPD research shows that Turner proposals would not lead to a cancellation

A 3% employer contribution towards pensions under a National Pension Savings Scheme (NPSS) would not lead to a cancellation or levelling down of existing pension arrangements, according to the Chartered Institute of Personnel and Development (CIPD). The CIPD/KPMGís latest quarterly Labour Market Outlook report shows that only 1% of firms would level down their existing arrangements while employers are twice as likely to say that the 3% employer contribution is too low as say it is too high.

Duncan Brown, Assistant Director General of the Chartered Institute of Personnel and Development, responding to the publication of Lord Turnerís Pensions Commission Final Report, said:

ìThe vast majority of employers are already providing pensions at a level well above the 3% employer contribution Turner recommends for the NPSS, and our research shows that there is no evidence that levelling down is likely to occur. The issue therefore is get the buy-in of employers without occupational schemes, many of whom are very small companies. We therefore support both the employee-auto enrolment scheme and Turnerís challenge to the Government to identify ways in which the costs to small employers can be mitigated. However, such measures need to be underpinned by educating both employers and their employees.î

Brown continues, ìWe cannot however leave everything to the Government. Employers must continue where possible to provide pensions as these are one of the few tax effective ways of delivering rewards to employees and are increasingly being valued and appreciated by them. The greater use of defined benefits schemes also gives employers more scope to provide a distinct reward package that meets the individual needs of the workforce, which can improve recruitment and retention rates dramatically ñ like it has at First Group. The Government can however simplify the legislative landscape further for occupational schemes, to provide further encouragement for employers to provide occupational schemes.î

Key findings from the recent Labour Market Outlook include:

Employers are twice as likely to say that the proposed 3% employer contribution is too low as to say it is too high (even among SMEs with between 25 and 249 staff), these findings are reversed among employers with fewer than 25 staff.

More than four fifths of employers, with a few still undecided, say that they would continue with their existing arrangements if Lord Turnerís proposals were implemented. Meanwhile only 1% say that they would level down.