Half of UK companies with a turnover exceeding £1m are not yet prepared for pensions simplification, new research indicates.
A survey conducted by pensions firm Prudential finds just one in ten believe they are ‘fully’ geared up for A-Day on 6 April 2006, which is now less than eight months away.
Moreover, 13% of respondents say they simply don’t know if they are prepared for simplification, while as many as six in ten company heads have 'little or no understanding at all' of the new pensions changes or the implications for employees.
Just 8% of respondents claim to have a 'very strong understanding' of the future pensions changes.
The survey finds the manufacturing industry is most prepared for A-Day as this makes up 17% of companies prepared for reform, compared with 11% in the service industry who claim readiness.
Dave Harris, corporate pensions director at Prudential UK, says a large amount of company executives are oblivious to the minefield of changes awaiting them following A-Day.
He says unless companies react now, they will be faced with a mountain of disgruntled staff who stand to loose superior pension benefits.
“For instance, scheme rules will normally need to be altered before higher tax-free cash can be paid or before the trustees can agree to something allowed in new legislation, but not in the current scheme rules,” says Harris.
He adds the period leading up to A-Day is a chance for companies to review their pension offering and could potentially cost them if they do not look out for their employees.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
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