Survey U.K. Firms May Cut Benefits Under New Pension Law

By Staff Report

Sep. 1, 2010

More than one-third of large U.K. employers say they are likely to reduce pension benefits when rules requiring them to automatically enroll employees go into effect in October 2012, according to a survey released Tuesday, August 31.

The survey by the London-based Association of Consulting Actuaries found that 41 percent of employers said they are “likely” or “highly likely” to reduce future pension benefits due to the automatic enrollment law.

The association surveyed 210 large employers—companies with more than 1,000 employees—during July and August.

According to the study, 16 percent of employers said they would be “highly likely” and 25 percent said they would be “likely” to review existing pension benefits to mitigate the increased cost of higher plan membership caused by automatic enrollment.

The U.K. government rules requiring that all employees automatically be enrolled in workplace pensions are expected to increase membership of employer-sponsored pensions by 35 to 40 percent, according to survey respondents.

Under the rules that go into effect in October 2012 for larger employers, employees would automatically be enrolled but also could opt out of their employer’s pension plan.

By 2017, automatic enrollment will apply to companies of all sizes. The rules were first announced in 2006.

While 75 percent of employers surveyed said they supported the principle, 70 percent also said the automatic enrollment regulations “appeared complex.”

In June, the recently elected U.K. coalition government said it was conducting a review to determine how best to support the implementation of automatic enrollment into company pension plans. Interested parties have until September 30 to offer feedback to the U.K. Department for Work and Pensions.

More than half of the respondents to the ACA survey said they believe the government should delay implementation of rules.  

Filed by Sarah Veysey of Business Insurance, a sister publication of Workforce Management. To comment, e-mail


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