Pensions 'inadequate' say bosses

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More than half of senior executives believe staff pension schemes are inadequate to fund a comfortable retirement, a survey suggests.

This feeling of inadequacy was most acute in firms which offer a pension where returns are based on investment performance rather than final salary.

Fidelity Pensions Management quizzed senior executives from 100 UK firms, employing one in 10 of all workers.

An estimated 12 million Britons are not saving enough for old age.

Finance directors are in the invidious position of knowingly providing many of their employees with an inadequate pension Simon Fraser, Fidelity

Lower contributions

The Fidelity survey underlines mounting concerns over the adequacy of workplace pensions.

In recent years, many firms have replaced lucrative final salary schemes - which pay a retirement income based on final salary and length of service - with less expensive money purchase plans.

Under money purchase, the eventual size of retirement income depends on investment performance.

This shift to money purchase has resulted in lower employer and employee pension contributions eroding retirement income prospects, Fidelity said.

It seems senior executives are aware of this sea-change and its potential implications for employee pensions.

"Finance directors are in the invidious position of knowingly providing many of their employees with an inadequate pension," said Simon Fraser, Fidelity president of international business.