According to PricewaterhouseCoopers, 48% of organisations are deferring decisions on changes to pension provision for their higher earners, while 30% are putting on hold intended changes relating to pensions for their wider workforce.
Next month, several pension changes come into effect, including an increase from 50 to 55 in the age at which individuals can retire and withdraw tax-free cash and the freezing of the annual and lifetime pension allowances. The Government is also expected to clarify the way the proposed new tax on employer pension arrangements for higher earners will operate from April 2011, which present new compliance, design and communication challenges.
Marc Hommel, partner and pensions leader, PricewaterhouseCoopers, said:
"Employers are reducing overall workplace pension provision due to frustrations about their inability to plan for the long term because of continuous regulatory and tax changes. Frequent changes have undermined trust in the durability of the legal and tax framework governing pensions and this has dented employers' inclination to support occupational pension plans.
"In the absence of concessions to the higher-earners tax proposals, which we believe will lead to further deterioration of pensions provision for individuals in all earnings brackets and accelerate defined benefit scheme closures, we hope for a quiet Budget in relation to pensions. Employers do recognise the social merit of supporting retirement savings but need stability and consistency in the regulatory framework if they are to be motivated to keep or resurrect good-quality workplace pensions. The need to raise revenue to fix short-term finances must not consume the long-term goal of enabling people to retire with financial security."