‘Collapse’ in Private Sector Pensions
The Express reports on its front page that the number of people paying into workplace schemes has fallen below three million. With the number of people in private sector employment at 24m, this leaves over 20m outside workplace schemes.
The figures released by the Office for National Statistics (ONS) showed that the number of private sector workers paying into pension schemes has plummeted to its lowest level since records began.
Meanwhile, the Department for Work and Pensions (DWP) released its own figures suggesting that the tide can be turned by the new auto-enrolment scheme. From 1 October the largest employers – with 120,000 or more workers – must place eligible workers into schemes, with all other firms gradually being enrolled in a staging process over the next six years. The DWP suggest that around 600,000 more people will be putting money into a workplace pension by the end of the year due to the legislation.
Also today, Labour pressed the Government to look at economies of scale to encourage saving by making pensions better value. Speaking to Money Marketing, Labour Shadow pensions minister Gregg McClymont said “You will be hearing more from us on the issue of scale. If you look around the world, there are examples in the US and Australia of large schemes that are able to deliver exceptionally low charges to savers.” This argument was developed in the Unions21 publication The Future of Pensions in which David Pitt-Watson wrote: “Typically a large collective scheme has lower costs”.
The Guardian in its coverage of the issues highlights the struggle workers are facing to find accounts that give them real returns on their savings. Earlier this month the TUC released it’s PensionWatch report which revealed bosses receive 24 times more from an accrued pension than employees: The average accrued pension for a director was £240,191 a year, compared with the national average of £9828.
A timely example of some issues faced in the private sector is emerging in Somerset: This is West Country reports that Workers at Bridgwater’s Argos distribution centre have gone on a four-day strike in response to the closure of the Final Salary Pension Scheme in favour of one linked to share prices and profits. The move would deprive Unite workers of thousands of pounds upon retirement.
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