Employers body CBI calls for £850m a year to help small firms implement personal pension accounts

The CBI has called on the government to provide a package of financial support to help employers implement its new pension proposals.


The employers’ organisation welcomed the government’s White Paper but urged ministers to stick to their pledges to help firms implement the proposals.


John Cridland, CBI deputy director-general, said: “Business has long supported a system of low-cost, personal accounts for people without an existing occupational scheme. If properly implemented, these proposals will boost pension participation rate for many millions of people currently not saving for their retirement.


“But without a package of support measures, employers with existing schemes might be tempted to cut their contributions to contain the extra expense; and firms without will see growth and employment affected.”


The government estimates that automatic staff enrolment and compulsory employer contributions will cost employers at least £2.8bn a year.


The CBI would like an £850m-a-year package of financial support for small employers. It claims this can be afforded out of the £4bn the government has recouped from the abolition of the National Insurance rebate for defined contribution pension schemes.


The CBI urged ministers to ensure five key aspects of the proposed legislation are delivered:




  • Fixing employers’ contributions at 3% of wages on the face of the bill to ensure that it cannot be ratcheted up because of trade union pressure at a later date. The TUC is still committed to an eventual employer contribution of 10%.


  • Phasing in over three years the level of employer contributions for firms without existing pensions and offering similar support for those already running schemes – which ministers have committed to doing.


  • Ensuring the burden on employers of administering the new system of personal accounts is kept to a minimum and is subject to a ‘light touch’ compliance regime.


  • Introducing a simple ‘good scheme’ test for companies wishing to continue operating their own pension plan, rather than the new system of personal accounts.


  • Allowing firms with existing good quality schemes a waiting period before being required to auto-enrol new employees.

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