Do not force employers to contribute to pensions' scheme: CBI

Do not force employers to contribute to pensions' scheme: CBI

	Published : Mon, 20 Feb 2006 20:00 By : Phil Bateman Print this Story

LONDON - The Confederation of British Industry (CBI) had called on the government to develop a pensions saving model wherein employers are not forced to contribute to the scheme and small employers are helped out of their quandary by providing state incentives.

CBI deputy director general John Cridland said that many small firms could opt out of the proposed "National Pensions Saving Scheme" by simply increasing the wages of the employees, “They’re in a better position than anyone to convince their employees not to opt in,” Mr Cridland said.

“They can sit employees round the table and say ‘So, do you want a wage increase or do you want us to pay into the scheme?’" Cridland said. “It’s unrealistic to think that individuals and their bosses won’t have a dialogue.” The CBI says that forcing employers to pay 3 percent into the scheme for every worker that opts for it would trigger the collapse of more than 1.57 million businesses in the country that employ less than 250 employees.

CBI also said that compulsory contributions would add £1.5 billion to the £191 billion that is already doled out by small businesses. "The CBI believes there must be an equal right to opt out (of the national plan) for both business and employee so individual economic realities can be taken into account," Mr Cridland said.

"An active dialogue between employer and employee is also at the heart of the CBI model and, to give the voluntary approach additional 'bite', employers who decide to opt out will have to explain to employees why they are doing so."

The CBI said that Lord Turner's pensions' report, which recommended the setting up of the NPSS, had neglected to take these small businesses into account. Giving the employer an option to withdraw from the scheme would force him/her to talk to the workers and that dialogue could produce an amicable solution.

But the TUC has said that the CBI was trying to "sabotage" the pensions reforms, "Without some modest compulsion, the race to the bottom can only continue as good employers are undercut by the bad who refuse to provide a pension for staff," the union's general secretary Brendan Barber said.