American Express's move to suspend contributions into its UK stakeholder pension scheme for up to 18 months could be the thin end of the wedge, a Midlands adviser has warned.

Adrian Pickersgill, of Stratford-upon-Avon-based Self Chartered Financial Planners, said the danger was that it could push the sector to a new low.

"We are all familiar with the reasons behind final salary schemes going down the pan, but it is very worrying that Amex is seemingly following the same sort of path on stakeholder pensions," he cautioned.

"Were this to be the start of a trend it would be yet another blow to the status of pensions in this country. And, for goodness sake, the industry has had enough bad news in recent years.

"If companies, watching this, perceive it to be another easy way to cut costs then it is a grim picture.

"Where it is a case of keeping your job or taking a pension hit, you are going to choose your job. But, ultimately, if somehow you cannot make the amounts up, then you will get a poorer pension on your retirement.

"For a company of the size of American Express, with a worldwide image to protect, it is a poor example to set."

The US-based credit card company suspended contributions to its UK stakeholder plan from July 1, citing the need to cut costs and maintain profitability amidst the troubled economic environment.

Amex says it will lift the suspension no later than January 1, 2011. 

A spokeswoman said contributions were unlikely to be backdated when they are resumed.

Prior to the suspension, Amex made a core contribution of three per cent to employee stakeholder pensions and would match contributions to a maximum of six per cent.

It has approximately 6,000 employees in the UK.

Already this year, the British arm of US insurance broker Aon announced plans to reduce contributions by up to half to its money purchase pension scheme and Aviva, the former Norwich Union, axed free pensions to nearly 16,000 of its UK staff.

Reaction to the latest setback has been largely hostile.

Hargreaves Lansdown head of pensions research Tom McPhail was quoted as saying: "I hope we don't see more of this but given that it is expected that job losses will continue to rise through the course of the year I suspect we will. Cutting the pension contributions can buy you a bit of breathing space but it's not solving the problem, just deferring it. The price paid is that your employees are going to have to work later into retirement or they're going to have to retire on less income."

Axa Life's Mark Rowlands stated: "While it may feel more palatable today for employees for their pension contributions to be reduced, it is actually much more harmful to their long-term wealth.

"The point of a pension is to provide someone with enough money to retire with a lifestyle that they choose, based on how much they invest over their career. Regular payments, from early in someone's career, make this more achievable."

Mr Pickersgill added: "Effectively employees treated in this way are taking a pay cut.

"But, because for most of them retirement is a long way off, in hard times like today they are prepared to live with it.

"The earlier you start saving for retirement, the more likely you are to build up an acceptable pension pot. If, for whatever reason, you allow things to slip then surviving in old age will be a struggle.

"In some ways your pension payments should be the last thing to prove expandable, not the first."