Friday 11 May 2007

People 'pay less into pensions'

Contributions to pensions have fallen sharply since the rise of "money purchase" schemes, according to the Office for National Statistics (ONS).

In 2006, 40% of members of such schemes saw less than 8% of their salaries being paid in as total contributions.

That compared with a combined 20% contribution rate for members of traditional final-salary schemes.

It was also less than the 8% minimum rate suggested for the government's proposed system of personal accounts.

In 2005, the average company money purchase scheme received total contributions of just 9% of salary.

"This confirms the employer retreat from pension provision," said Nigel Stanley, head of campaigns at the TUC.

" An awful lot of people at work today now face big cuts in ther living standards when they retire, particularly those who are now too old to build up decent savings when personal accounts start in 2012."