Pension scheme contributions set to rise

by Gill Montia

Story link: Pension scheme contributions set to rise

New research from Skandia, the pension and long-term investment provider, shows that nearly 65% of financial advisers questioned in its survey believe that pension contributions will increase during the next three years.

Around one-third of the 500 experts questioned expect there to be no change in the level of contributions, while just 3% expect to see a decrease.

According to Skandia’s figures, around 40% of pension schemes have recorded an increase in contributions since April 2006, while 50% have shown no change and for 2%, contributions have decreased.

Nick Bladen, head of pensions marketing at Skandia, says: “What this data is suggesting is that … more and more people are becoming aware of the opportunity offered by pensions, namely huge flexibility in investment strategy and significant tax relief.”

He adds that this is welcome news for the pensions industry and points out that the options currently offered by pension scheme providers allow contributors to reap the benefits of flexibility and single premium funding.

Meanwhile, Skandia is continuing its campaign to apply Customer Agreed Remuneration (CAR) to the whole pensions market. The company believes it is essential to provide clarity and choice for consumers.

Under CAR, products are priced by providers, excluding charges to cover the costs of remuneration to advisers.

Advisers and customers then agree a level of remuneration, in the context of a discussion of all services being supplied.