One in five firms would have to lay-off staff if they were forced to pay into pensions for their employees, the British Chambers of Commerce (BCC) has warned.
The BCC’s survey of more than 800 businesses also shows that more than one-third of employers would be forced to meet the cost of compulsory contributions by freezing salary increases.
Just under a third said they would have to pass the cost on to customers by raising prices.
The government’s Pensions Commission is due to publish its recommendations on solving the UK’s pensions crisis in the autumn. Its head, Adair Turner, has promised radical solutions, not ruling out forcing employers to contribute to schemes.
But BCC director general, David Frost, said: “Compelling employers to pay into pension schemes would simply increase the cost of employing someone and it is clear that some firms would be forced to reduce the size of their workforce to meet this cost.
“At a time when our companies are facing fierce competition from countries such as India and China, compulsory pension contributions are the last thing that UK employers need.”
The BCC’s survey also shows that many businesses already find pension provision to be cost prohibitive.
More than half of firms that do not offer a pension contribution for their staff say the major reason for this is that they cannot afford to do so, with three-quarters of these companies employing less than 50 people.