Government capping leads employers to offer cash
22 March 2004
Employers have said they will offer cash for those caught on the wrong side of the government's lifetime pension cap.
The Government's £1.5 million cap on lifetime pension savings in last week's Budget has prompted many companies to re-assess how they organise schemes for their top employees.
Ahead of the Budget, the National Audit Office had estimated that 10,000 people would be affected by the lifetime allowance limit - twice the figure predicted by the Government itself.
A new survey carried out by Mercer Human Resource Consulting has revealed that the majority of employers could offer cash or flexible benefits for the affected pensions that fall above the lifetime allowance of £1.5.
Figures showed that 81 per cent of companies asked would prefer a cash alternative. When it came to flexible benefit arrangements, 55 per cent, just over half, answered they would consider this, allowing employees to choose their own package.
Tim Keogh from Mercer, the company that carried out the survey, highlighted the advantages of such schemes: "Flexible benefit arrangements don't need to be implemented for the whole workforce - they can be targeted towards a select group of employees."
In the survey, 55 per cent of employers cited cost as the most important factor when it came to the choice of solutions.