UK employers organisation, the Confederation of British Industry (CBI) says that the report on pension provision commissioned by the UK government from former CBI director general Adair Turner “shatters the illusion that there is a single magic solution to the pensions crisis.”
“This appears to be a spot-on analysis,” says John Cridland, CBI Deputy Director-General. “The report shatters the illusion that there is a single magic solution to the pensions crisis. Compulsion would be a complete blind alley. The report makes clear that the emerging pensions crisis is most serious for low paid employees. Unless we act, these will be the poor pensioners of 2030.
Preventing this will require a mix of self-help, employer-help and government-help.But a bigger role for the state is inevitable. The government must not shy away from radical options and Adair Turner is right to highlight the need to embrace a varied approach, rather than focussing on one option as a total panacea. The government’s drive to tackle the pension crisis must offer a radical and varied approach if it is to succeed.”
The CBI wants the state pension increased by 32 per cent to the level of the pensions credit – a rise from about £80 to £105 a week in today’s money. This would eliminate pensions means testing and encourage more people on low incomes to save.
The employers’ organisation says the government could partly pay for this by gradually raising the state pension age to 70 between 2020 and 2030. The CBI stresses that employers must also do more to ensure the survival of the UK’s voluntary pension system. It calls on businesses to modernise pensions by combining where appropriate parts of defined benefit and defined contribution schemes.
The employers’ body makes clear that firms should contribute to pension schemes with employees, where they can afford to. It welcomes the government’s recent acceptance of CBI proposals that firms should automatically opt-in new employees to company schemes.