UK - The Confederation of British Industry (CBI) has called for concessions for small businesses in new pension reform proposals put forward as an alternative to the Pensions Commission's flagged National Pensions Savings Scheme (NPSS).
The CBI recommended a US-style “Pension Builder” to boost employee pension contributions, combined with additional support for smaller businesses - either a “Partnership Pension” in which the government matches employer contributions, or a “Pension Tax Credit”. The NPSS compels the employer to contribute 3% if employees don’t opt out.
Brendan Barber, general secretary of the TUC, said Turner’s contribution stipulations should be taken “seriously” and warned the government to “dismiss the special interest pleading” of the CBI.
He said: “More worrying is the clear CBI admission that employers will try to persuade staff to opt out of the NPSS. The government should be very clear this will not be tolerated and should not allow the CBI to sabotage future pension plans.”
Jay Sheth, senior policy advisor for the CBI, claimed that despite fears from the industry that smaller companies (with under 250 employees) will be hit hard by contribution compulsion - some to the point of collapse - recent unpublished CBI surveys suggested that employers were warming to the concept of contributing to some degree.
He said: “Consultation with CBI members, in particular smaller companies, has indicated a growing awareness of pension issues and a increased willingness to consider contributing to pensions.”
In creating the “Partnership Pension” and the “Pension Tax Credit” recommendations, the CBI believed either system would cost the government at most £555m a year on the assumption 40% of eligible businesses participate and an employee take up rate of 80%.
Sheth claimed the 40% calculation was rough but believed, if given the option, a “large number” of those companies would continue to provide their own occupational scheme, while some would move to the NPSS.”
By Daniel Flatt
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