Image by Chris Olson (illustrator, writer, blogger) via Flickr

A report this morning predicts that the Government’s workplace pension reforms, far from improving the lot of the average worker will see less money spent by large employers on their workforce’s pensions.

Predictably it falls to the Association of Consulting Actuaries to point out the Emperor’s New Clothes and no doubt the DWP will now close ranks and insinuate that this report is the work of a cartel of over qualified, overpaid number crunchers without whom we wouldn’t be in the mess we are.

Fortunately the ACA have their argument backed with numbers and they’ve rolled them out with such precision that my eardrums have hummed with” radiopensions “as I drove down the M4 this morning.

Here’s the reliably provocative William Robbins’ Citywire coverage

A third of larger employers plan to cut pensions spending despite auto-enrolment according to a survey by the Association of Consulting Actuaries (ACA).

The ACA report shows only 25% of employers have budgeted for the cost of auto-enrolment. Those employers also expect 12% to 17% of employees to opt out of workplace pensions after being auto-enrolled.

Smaller employers have based their budgeting on the expectation that up to 39% of employees will opt out, the survey revealed.

The survey also showed:

• 73% of employers say they are likely to auto-enrol all employees into their existing workplace pension scheme
• 21% will enrol all employees into a new scheme.
• 20% may restrict entry into their existing scheme with the remained (sic) going to Nest.
• 60% of employers presently offering no pension scheme said they are unlikely to auto-enrol employees into either the National Employment Savings Trust(Nest) or an employer’s scheme. The ACA said this suggests many some employers do not understand they are legally required to auto enrol.
• Of those that did plan to offer a scheme, 25% are likely to use Nest and 11% set up a new scheme

ACA Chairman, Stuart Southall (pictured) described the results of the survey as ‘alarming’ as they proved employers intended to lower their pension provision to the minimum required by auto enrolment rules.

He said: ‘The results of our latest 2011 Pension trends survey are alarming in a number of ways. They point to a rising trend amongst employers of all sizes to review existing pension arrangements and, given the economic climate, for a goodly number to seek ways to reduce their pension costs.’

‘As things stand, there is a clear danger of more levelling-down – a trend which our surveys have identified for some years now. With contribution rates into many schemes failing to keep pace with the pension costs of longer life-spans, and with employers expecting, and in some cases relying upon high anticipated levels of pension opting-out for budgetary purposes to keep their auto-enrolment costs down, warning bells are ringing.’

Southall criticised the government for failing to appreciate the financial burden auto enrolment would add to employers already struggling with a poor economic climate.

‘Nor, in my view, have they been sufficiently in listening mode about ways in which they might encourage more employers to do better than simply the basic,’ he added.

‘The preparedness of employers to share risks…needs to be followed up with some urgencyI can’t disagree with any

I can’t disagree with Stuart. On a technical level, he is right on all counts.

He’s also right to point out that employers have had enough of being bullied into sorting out what are essentially social issues. Social issues are sorted out by Society, Society with a capital S is governed by Government with a capital G.

Employers are feeling more than a little bruised by the events of the last three or four years. They are in mo mood to shoulder extra tax and national insurance and then be told they are responsible for insuring the pensions gap between what people do for themselves, what the state does for them and what they need in their ever lengthening retirement.

Let’s hope that instead of issuing yet more consultation documents on the policing of the auto enrolment regulations, the Government will , through its key Departments, DWP and the Treasury, start getting us excited about the prospect of this new order. Otherwise this new pension paradigm will degenerate, as its Stakeholder predecessor degenerated, into a fearful, unloved, unadopted and unenforced mess.

Related articles

• Government pension reforms ‘will leave savers worse off’ (telegraph.co.uk)
• IFEs not IFAs (henrytapper.com)
• Staff ‘in dark’ over pensions (lv.com)
• When we make company pensions compulsory.. (henrytapper.com)
• Small firms struggling on pensions (venturelink.wordpress.com)
• Buy now while IFAs last? (henrytapper.com)
• Accounts and accountability-who pays for NESTCorp? (henrytapper.com)
• Top tips on saving for a pension (moneyexpert.com)
• The workplace pension changes that affect you (confused.com)
• Scheme Pensions aren’t the magic bullet -yet (henrytapper.com)
• New govt pension scheme could be risky for savers (confused.com)
• New national pension scheme gets the go-ahead (confused.com)
• Inflation to cut pensioner spending power by 60pc (telegraph.co.uk)
• The right to screw up your pension (henrytapper.com)
• DC investors -are we panicking? (henrytapper.com)
• Can we make pensions simpler? Please? (blogs.confused.com)
• When “two sevens clash” (henrytapper.com)
• There are better ways to de-risk than ETVs (henrytapper.com)
• The case for doing nothing (henrytapper.com)