Employers given final pensions warning

The TUC's call for compulsory occupational pensions seems to be gathering support among employers, despite opposition from the Confederation of British Industry (CBI).

The government-established Employer Task Force on Pensions, which published its report in December, stopped short of recommending compulsion "at this stage" but chair Sir Peter Davis warned that the voluntary system is at the "last chance saloon".

An Engineering Employers Federation (EEF) report published a few days earlier revealed that over two thirds (68%) of manufacturers with occupational pension arrangements now support compulsory pension contributions. The lack of a "level playing field" means that employers providing pension schemes feel they face unfair competition from those who don't.

The TUC argues that the only way to ensure a decent income in retirement for all is for both employers and employees to be compelled to pay more for pensions (Labour Research October 2004, page 4). The CBI rejects this view, describing compulsion as "a new tax on jobs" which would lead to a "levelling down, rather than an increase in pension saving".

The Employer Task Force report backed the current "voluntary" framework for private and occupational pension saving but acknowledged growing support for compulsion.

"Unless we can reverse the current decline in adequate employer-led pension provision and deliver increased savings from both employers and employees through the voluntary framework, the government will be forced to look at more drastic solutions," it said.

The TUC welcomed the report but general secretary Brendan Barber said: ''It's time to stop good employers who make a proper contribution to pensions being undercut by those who refuse to pay up".