Pensions proposals could harm smaller firms
30/11/2005
Commenting on the publication of the Pensions Commission’s final report,
David Frost, Director General of the British Chambers of Commerce (BCC), said:
“We are very disappointed to see the speculation that employers would be expected to pay into the so-called ‘National Pensions Savings Scheme’ (NPSS) alongside employees has been right. Small firms would be particularly badly hit, and businesses have told us that they would have no option but to lay-off staff, freeze salaries and much needed investment. This is compulsion by the back door and would be bad for businesses, their employees and the UK economy as a whole.
"The administration of this scheme is a major worry. It could be a real nightmare for small firms in particular, who are already struggling to cope with the demands that the already complex payroll system places on them. The cost and administrative elements of the proposed NPSS are bad for small businesses and the Government must resist any plans to force businesses to pay into such a scheme."
Mr Frost, however, stressed that the BCC was not opposed to the concept of a national pensions scheme in principle. He said:
"The NPSS, by making use of automatic enrolment, could serve to bolster saving amongst private sector employees and that is clearly a good thing. Put simply, the BCC would not oppose some kind of national savings scheme, provided that it encouraged rather than forced employers to contribute and was easy to administer."
The BCC was more positive about the Commission's proposals for reforming the state pension system. Mr Frost said:
"A higher basic state pension that is less reliant on means testing will provide a much better foundation for individuals to build private savings. However, it is important to stress that business taxation must not rise in the future to pay for this new system. Rather, future governments must find savings elsewhere to pay for the increase in the basic state pension."
Mr Frost also supported the Commission's proposal to increase the state pension age. He said: "Raising the state pension age is a crucial element of paying for a higher basic state pension and a wholly logical response to increasing longevity. We are very concerned about the Government's ability to drive this reform through given the deal that has been struck allowing existing public sector workers to retire at 60. This decision has effectively created a two-tier workforce and the Government must revisit the issue in light of the Commission's proposals."
The British Chambers of Commerce have actively campaigned against compulsory contributions and took business concerns direct to Chancellor Gordon Brown yesterday. Chambers of Commerce across the country have been writing directly to the Minister for Pensions Reform ahead of the BCC's meeting with the Minister next week.
