ABI wants government to force employers to pay pension |
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Published
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Mon, 20 Jun 2005 07:35
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The Association of British Insurers has demanded that companies who don't offer pension schemes to staff should be forced to contribute towards the employees' private pension plans. This proposal is a part of the pensions manifesto unveiled by the ABI.
These proposals by the ABI would push up the retirement savings by £1.5 billion a year. They would also provide a tax break for businesses. Taking note of the severe crunch in retirement funds that is forcing pensioners to look out for odd jobs even after retirement, the ABI said that employers who pay into this fund were eligible to receive a refund of national insurance contributions in return. The ABI added that its pension reform strategy would cost the Government between £500 million and £700 million a year.
| Commenting on the manifesto, Stephen Haddrill, director-general of the ABI, said, "It's not about spinning people a line, it's about the industry doing things differently so that confidence can come back over time. There are a lot of people out there who didn't get a fair deal. The regulator's identified that. We've just got to deal with it, put our hands up and get on with it. Our research has shown that, with contributions from both employer and employee at the relatively modest rate of 3%, overall savings would rise by £4.2bn a year."
Mr. Haddrill added that employees should be automatically included in their company’s pension scheme unless they opted out. "We call for legislation to require employers who don’t offer pensions to pay pension contributions into any stakeholder scheme nominated by an employee," he said.
Employees may welcome these proposals but, a survey by the British Chambers of Commerce (BCC) has found that employers would resort to downsizing workers rather than paying into their pension accounts. David Frost, director-general of the BCC, said, “Compelling employers to pay into pension schemes would simply increase the cost of employing someone and it’s clear that some firms would be forced to reduce the size of their workforce to meet this cost.” Doug Taylor, campaigns team leader at consumers group Which?, said: " We need to stop tip-toeing around this issue." He also criticized
ABI for their timid proposals.
Some of the highlights of the ABI's pension manifesto are:
* Improve eligibility for the basic state pension
* Bring self-employed into the state second pension
* Simplify and promote contracting-out
* Simplify pension transfer
* Reform the way in which financial advice is paid for
* Reform the new system of Basic Advice
*Introduce more flexible annuity rules and products
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