The National Pensions Saving Scheme may be targeting too wide a section of the working population, putting some employees at risk of losing higher pensions contributions, the National Association of Pension Funds (NAPF) has warned.
Those whose employers already make contributions to their pension funds risk losing out by signing up to the government scheme, the industry body claims.
"There is a risk ... that if the Personal Accounts scheme is poorly targeted the many millions who are currently saving in today's high-value workplace schemes may receive smaller pensions," Reuters reported NAPF spokespeople saying at its annual Investment Conference.
An employer who chose to pay the minimum contribution stipulated by the Personal Accounts scheme into their employee's fund would allow their staff member £3,000 a year less to live on in retirement than if they paid the average amount currently invested by employers in defined contribution occupational pensions schemes, NAPF found.
To avoid such a scenario, employers should be given incentives to make generous contributions to the Personal Accounts, it was proposed.
According to NAPF calculations, the pensions scheme is only appropriate for 7.5 million people across the UK.To learn more about occupational pensions, click here.
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