Tuesday, 4 December 2007

Will Personal Accounts increase saving?

An interesting briefing from the Pensions Policy Institute was sent out today looking at the possible impact of the Personal Accounts on levels of pension contributions. I have been very sceptical about some of the claims made about 'levelling down' amongst employers already running schemes, and such stories tend to overlook the rather important issue of 'levelling up' amongst employers who currently make no pension contributions.

However this briefing does give some grounds for being a bit concerned about savings rates. In three out of the four scenarios for the possible impact of Personal Accounts on savings levels they actually go up, and quite substantially. In the other possible scenario (which the PPI describe as 'extreme') the total actually goes down because all employers are assumed to auto-enrol staff on minimum terms. However in one of the other scenarios (which is based on a survey of what employers say they will do) although there is a net increase in total saving there is a significant drop in saving into existing schemes.

Anyway, worth a read. The report can be downloaded here.

No comments: