However, EEF expressed disappointment at the decision to have an annual limit on employee/employer contributions into personal accounts, as this will inevitably restrict the opportunity for some employees and employers to make additional contributions into personal accounts.
Commenting, David Yeandle, EEF Deputy Director of Employment Policy, said:
“Today’s response ticks most of the boxes as far as manufacturers are concerned and represents another building block in implementing government’s package of pensions reforms. However, given the importance of encouraging greater levels of saving for retirement, we are disappointed with the decision to have an annual cap on contributions into personal accounts.
“Despite this, we are encouraged at the government’s apparent willingness to examine the opportunity for employees to make the occasional lump sum contribution into personal accounts. It is essential that this helps employees in the government’s target group for these accounts to increase their retirement income."
Employers will have an important role in personal accounts and EEF welcomed the decision to establish them as a trust-based occupational pension with both employers' and members' panels that will be consulted on key issues.
EEF also endorsed the decision to automatically enrol eligible employees into personal accounts when they start employment, although it stressed that this must be coupled with arrangements that ensure personal accounts are simple for employers to administer.
David Yeandle added:
“Personal accounts are a key element of reform, but employers regard the better regulation of occupational pensions as equally important. Government must now address this issue to help those companies striving to retain their occupational pension scheme and reduce the chances of them being levelled down when personal accounts are introduced."
EEF also took the opportunity to re-iterate concerns at the continued absence of proposals to provide smaller employers with some initial financial assistance when personal accounts are introduced (1). This would help to meet the additional costs of administering and contributing to personal accounts that many smaller employers will face and create an environment in which the small business community is more supportive of personal accounts, an important requirement for their successful implementation.
ENDS
Notes to Editors
- EEF published proposals earlier this week on small firms assistance when personal accounts are introduced which have been submitted to HM Treasury. www.eef.org.uk/mediareleases
- EEF, the manufacturers’ organisation is the representative voice of manufacturing in the UK with a federation of 11 regional Associations and ECIA, the Engineering Construction Industry Association and UK Steel. The EEF has a growing membership of almost 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries.