Pension savers could lose out under gov't scheme

Existing pension savers could lose out under the government's proposed auto-enrolment scheme, according to pension experts.

Plans to extend auto-enrolment schemes to insurance-based workplace pensions were announced in May but Laith Khalaf, pensions analyst at Hargreaves Lansdown, said that, under the new rules employers may reduce pension contributions to deal with the costs.

He said: "One danger is that some people who are already in pensions will find that their employer contributions are reduced."

This lower level could see many end up with far less in their retirement pot than they had hoped.

In a speech to the Association of British Insurers last week, Theresa May, shadow secretary of state for work and pensions, said that the scheme could lead to millions of people facing a gap in employer contributions that they might never make up.

She added: "Not only will this not lead to improved levels of savings it could actually reduce saving rates at the very time we need them to be increasing."