Employers antagonised by Pensions Act: CBI |
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Published
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Thu, 06 Oct 2005 16:05
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Employers in the UK are angry over the tough pension regulations set by last year’s Pensions Act. Higher running costs and tighter regulations are forcing them to cap their liabilities and limit future benefits for employees. According to a report, most believe it will lead to a decline in pension provision at the workplace.
The government’s belief that tougher regulations would increase employees’ confidence in pensions was hotly contested by most employers.
The report by the Pensions Institute at Cass Business School said that employers would need some incentive like a tax cut if they were forced to contribute to a pension.
As pension liabilities cut into profits, bigger organisations might choose to close their final-salary schemes to existing employees. They may even switch to a pension based on a career average salary. The government needs to reconsider the 2004 Pensions Act, according the CBI if it wants to avoid a future pensions crisis.
The CBI suggested that the weakest schemes must be subsidised by the government rather than the strongest companies as required by the Pensions Protection Fund.
The Pensions Institute also warned that within five years most defined benefit schemes will be denied to new recruits and will also have stopped new accruals for existing members, because employers were keen to get out of this forced liability.
Employers were angry that what was once voluntary has now become forced contribution - “a legal guarantee” for the employee.
Meanwhile MP and pensions campaigner Frank Field supported the suggestion that member of final salary and public sector pension schemes support the Pensions Protection Fund with an annual levy of £620 million. His suggestion that workers be also made responsible for the cost of their pension was welcomed by the CBI.
The CBI urged the government to rethink its pension policy.
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TUC accuses corporate bosses of double standards in pensions 