Chancellor George Osborne confirmed in his Budget speech today that state pension changes – creating a single tier state pension - will be brought forward to 2016 from 2017. KPMG warned that, whilst this is positive news for individuals, it will speed up the closure of private sector final salary pension schemes.
Gordon Sharp, director in KPMG’s pensions practice, said: “Whilst this is a welcome simplification of the state system that will benefit lower earners in particular and the self-employed, it does give employers with open final salary pension schemes less time to make necessary readjustments to compensate for the higher national insurance bills that they will face. This measure will put an extra 3.4% on their NI bills. Whilst public sector schemes will be obliged to remain open, this measure is likely to speed up the closure of private sector final salary pension schemes.”
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.