Three choices for employers in NPSS

06 June 2006
Legal and General's pensions division has shed some light on the choices faced by employers as the government begins plans to usher in the National Pensions Savings Scheme (NPSS).

In the latest edition of the "Driven to retirement" series, written by the company's pensions strategy director, Adrian Boulding, Legal and General has said that employers realistically have three choices to deal with the changes proposed by Lord Turner.

The first option is to add auto-enrolment onto their current scheme, but as the take up rate would almost double from around 50 per cent to as much as 90 per cent, this would send the pensions bills for employers through the roof.

The second option is to introduce the auto-enrolment policy but reduce employer contributions to the minimum, a move that Mr Boulding hopes will not happen: "This would be a very sad levelling down of UK pension provision," he said.

A third option proposed by Legal and General is the "offset model".

"Here they maintain their existing scheme but without adding the auto-enrolment," Mr Boulding explained.

"They just change their scheme rules to say that where they are also required to pay a contribution to NPSS, they will reduce the contribution to their own scheme accordingly."

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