Midlands bosses divided on pension reform, says PwC
Views from the Midlands’ business leaders are “polarised” on the subject of the government’s pension reform. That’s according to PricewaterhouseCoopers (PwC), which canvassed the opinions of more than 50 directors from the region.
PwC met with HR directors, financial directors and chief executives at a seminar in Birmingham designed to help them understand the new pension regime.
The reformed legislation will see annual allowances reduced from £255,000 to £50,000 a year from April 2011.
The findings indicate views about the potential impact of the changes are ‘polarised’, with a small majority (53 per cent) of the view that the government has got the new regime right and a similar number (52 per cent) considering it ‘unlikely’ the changes will achieve the government’s stated aim of raising £4bn.
Sixty-seven per cent of Midlands companies indicated that they were considering various alternatives to “mitigate the impact of the resulting pensions tax burden”.
Of those businesses operating an active defined benefit scheme, 31 per cent envisage making no further changes to their scheme but 21 per cent believe they will close the scheme to future accruals. Thirteen per cent said they were likely to move from a final to a career average salary scheme.
Rupert Hutton, human resources expert at PwC in the Midlands, says: “While the figures indicate opinions are divided on the merits and potential effectiveness of the planned changes, it is encouraging to see that the majority of businesses are actively considering what is a complex and multi-faceted issue.
“For those businesses that are yet to tackle the issue, the challenge is twofold. Firstly, they need to understand who is affected by the changes and decide how and when they will communicate the impact of those changes.
"On a more strategic level, to prevent the competitiveness of reward packages being compromised, companies need to consider all alternatives to providing wealth creation opportunities for those affected, by considering both their pensions scheme and then alternative remuneration structures.”
