UK - The government will use the select committee on pensions to push compulsion through by the back door, senior Whitehall sources have revealed.
The committee hearings closed with evidence from pensions minister Ian McCartney.
Both McCartney and work and pensions secretary Andrew Smith have publicly ruled out the notion of compulsion – a measure which would cost UK business around £29bn.
But insiders close to the government have said that the select committee has been given a brief with a “heavy sway” towards recommending compulsion. And they say the department for work and pensions and the Treasury are both pushing for its introduction.
A source said: “The government would never support compulsion outright, so it had to devise a way to get compulsion through without being seen to be an ambassador of this controversial move.
“This was the reason behind setting up the select committee – an ingenious afterthought to the DWP’s dilemma it came across when drafting the Green Paper.”
There is little doubt that there is strong support for compulsion among MPs. A recent survey by Axa showed that 78% of MPs backed compulsory employer contributions and 73% were in favour of compulsory employee contribution.
The select committee’s remit – drafted by the DWP – says it must find out whether the government should compel individuals and/or employers to contribute to pension schemes, despite the government’s outright rejection of this notion.
Last month Australian senator Nick Sherry told the select committee that there was “no system around the world” that relied on voluntarism, which delivered more than 50% coverage.
But the select committee has also heard overwhelming evidence against bringing in compulsion, in particular by SPC president Donald Duval who stressed that – with the rights incentives – voluntarism can still work.
On other issues, such as raising the retirement age, however, the DWP has firmly rejected any change.
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