The two main employers’ organisations in the UK are split over whether the government should make pension contributions compulsory or not. The Engineering Employers Federation has published a survey of its members – which are mainly manufacturing companies – that found over two thirds supported compulsion in pension contributions.
The Confederation of British Industry (CBI), on the other hand – with members in the service sector, though it also claims to represent 20,000 manufacturers – declared itself opposed. “We understand that pension compulsion may suit the engineering sector specifically, but this does not mean it is the answer across the entire economy and could in fact do more harm than good,” says John Cridland, CBI Deputy Director-General. “Engineering companies are more likely to have pension schemes than business as a whole, so it is unsurprising that they would favour other firms doing to same. But this is not a view that would be shared by the majority of UK businesses. The CBI opposes any move towards pension compulsion. It could cost firms up to £22 billion a year and would be seen by many as a tax on jobs. Individuals may also resent being forced to invest in the stock market and could demand government compensation if their fund failed to deliver. Companies are fully committed to pensions and employer contributions have doubled from £18 billion in 1997 to £37 billion last year.”
“It should not be a surprise that a growing number of manufacturers with occupational pension schemes feel that, on grounds of competitiveness, there should be more of a level playing field for employer pension provision,” says David Yeandle, the EEF’s deputy director of employment policy. “However, this is a complex area and further compulsion could not be contemplated by manufacturers unless they see it as part of a satisfactory long-term solution to future pensions policy”
The EEF is setting up a pensions strategy group early next year to be chaired by a senior executive from a member company “to examine future pensions arrangements in the UK”.