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East Midlands Chamber News

Businesses oppose compulsory pension scheme

The commission is currently investigating whether to move the current voluntary pension system to one of compulsory contributions - where all employers would be required to pay into employees' pension funds. Employees may also be expected to contribute to the fund.The British Chambers of Commerce (BCC) believes compulsory pension contributions would increase the cost of employing staff and damage the competitiveness of businesses."Some firms would be forced to reduce the size of their workforce to meet this cost," said BCC's director general, David Frost."At a time when our companies are facing fierce competition from countries such as India and China, compulsory pension contributions are the last thing that UK employers need," he added.Recent BCC research found that if compulsory pension contributions were introduced, one in five employers would have to lay-off staff.The Federation of Small Businesses (FSB) also opposes the introduction of a compulsory pension scheme, saying employers should be encouraged, not forced, to provide pensions for their staff."Given the right environment employers can be encouraged to become more involved and contribute to pensions for their employees," said Carol Undy, chair of the FSB.According to a spokesman for the Department of Work and Pensions, the Pension Commission was set up following Government concerns over the lack of pension planning in the UK."The pension crisis has been fuelled by an increase in life expectancy and people retiring earlier," he added.The Pension Commission is due to publish its proposals in the autumn. (c) Business Hotline Publications Ltd 2005