10 February 2006
The Winterthur Business UK Pension Report published today by Winterthur Life, one of the UK’s top pension providers, has looked at how UK businesses¹ view the pensions crisis and the options currently being recommended in the Pension Commission’s Second Report.
- Government and pensions industry have rejected compulsion but British business still sees this as the most effective way to get the public to save
- British business wants more tax breaks to solve pensions crisis
- The most widely acclaimed solution is automatic enrolment into company pension schemes but only 15% of businesses currently use this
- Despite increasing costs British business still believes it has an important role to play in solving the UK’s pension crisis.
Mike Kellard, chief executive officer, Winterthur Life, says, “The government has said that any pension reform should promote personal responsibility, be fair, affordable, simple and sustainable. What our report highlights is with more support the current occupational pension scheme infrastructure supports many of the government’s key objectives. If automatic enrolment and employer contributions were combined with better employee communications and greater incentives for employers and employees alike, a low cost solution could be presented containing some of the most beneficial parts from the Turner Report.”
The key findings:
Responsibility for financial security in retirement:-
- Responsibility for financial security in retirement should lie primarily with the individual (86% said ‘responsible’) but companies still view themselves as responsible, with 49% - responsible’, and government 68% - ‘responsible’
- On the fundamentals of financial education, 85% believe that the government is responsible for the financial education of employees.
Most effective strategies:-
- Around 90% of UK businesses interviewed supported the statement that the most effective single strategy that government can introduce to increase the take up of pensions is improved tax incentives for employers and employees alike
- Results suggested that employee/employer compulsion was the second most popular single strategy (over 80% ‘effective’)
- In response to what employers could do to increase take-up, 73% said increased employer contributions would be ‘effective’, and employer contribution matching, with 75% of employers believing this would be ‘effective’.
The issues:-
- The issues however that compulsion would create were seen to include having an impact on wage negotiations (72%), a lowering of overall contributions (71%), an immediate impact on staff pay rises (66%), and potential future mis-selling (50%)
- However, UK business believes auto-enrolment by employers could be the answer to encourage take-up, with 80% saying it would be ‘effective’. Increased education in the workplace was considered ‘effective’ by 69% of respondents
- Ironically, few employers interviewed currently used auto-enrolment (15%) or provide access to an adviser or consultant from a provider company (33%), relying strongly (87% of respondents) on information packs to communicate the merits of the scheme.
¹ The Winterthur Life Business UK Pension Report discusses and addresses some of the key issues faced by the Government in ensuring that UK citizens have adequate financial provision in their retirement. It is based on in-depth research carried out by Winterthur Life UK during November and December 2005 with large UK firms from across all industries. Interviews were conducted with HR Directors, Finance Directors or those responsible for their company pension scheme. Each employer averaged a minimum of 100 employees. A total of 128 interviews were conducted.
For a copy of the report contact the Winterthur press office on 01256 798099.
For further information:
Paul Riddell Winterthur Life, Press Office +44 (0)1256 798099
Sandra Fulton Winterthur Life, Press Office +44 (0)1256 798310
Christine Wood Financial Dynamics +44 (0) 207 269 7253
Notes to Editors
About Winterthur Life UK Limited
Winterthur Life UK Limited is part of Winterthur Group, which is part of Credit Suisse Group, a leading global financial services company headquartered in Zurich.
Winterthur Life UK offers pensions and investments for high net worth clients distributed via top tier IFAs and is renowned for its innovative approach to financial products. Its philosophy of transparent product propositions offers advisers a range of retirement and investment solutions with an open charging structure.
Winterthur Life UK is one of the UK’s top 10 providers of single premium personal pensions, trustee investment plans and corporate pensions via IFAs and a leading provider of self-investment retirement plans like Self Invested Personal Pensions (“Sipps”).
Any opinions expressed in this media communication are made as at the date of publication but are subject to change without notice. Past performance is not a guide to the future. The value of shares/units and the income from them can go down as well as up. Exchange rate fluctuations may cause the value of underlying investments to fall as well as rise. Yields are not guaranteed and may fall or rise.
Winterthur Life UK Limited is authorised and regulated by the Financial Services Authority.
www.winterthur-ifa.co.uk
Winterthur Group
Winterthur Group is a leading Swiss insurance company with head office in Winterthur. As an international company, the Group provides a broad range of personal, property and casualty insurance products, as well as insurance solutions in life and pensions that are tailored to the individual needs of private and corporate clients. Winterthur Group has approximately 19,500 employees worldwide. The company achieved a total business volume of CHF 22.9 billion in the first nine months of 2005 and reported assets under management of CHF 152.9 billion as of September 30, 2005.
Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich. Credit Suisse, the banking business of Credit Suisse Group, provides its clients with investment banking, private banking and asset management services worldwide. Credit Suisse offers advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as retail clients in Switzerland. Credit Suisse Group also includes Winterthur, a Swiss general insurer with a focus on international business activities. Credit Suisse Group is active in over 50 countries and employs approximately 60,000 people. Credit Suisse Group’s registered shares (CSGN) are listed in Switzerland and, in the form of American Depositary Shares (CSR), in New York. Further information about Credit Suisse Group and Credit Suisse can be found at www.credit-suisse.com. Further information about Winterthur can be found at www.winterthur.com.
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