Fixed term pension plans are ‘damaging’ for firms

Proposals to give fixed term workers the same rights to company pensions as
permanent staff will prove unworkable and cost businesses £110m a year in
additional administrative and pension costs.

This is the view of the CBI and the Employers’ Forum on Statute and Practice
(EFSP), which are unhappy with the latest draft of the Fixed Term Employee
Regulations because of the inclusion of the rights.

The regulations, which are subject to a three-month consultation period,
will be implemented in the UK in July this year under the EC Fixed Term Workers

The CBI estimates many fixed term workers will leave schemes before they
have been in them long enough to qualify for a pension, resulting in an
estimated £13m in unnecessary administration costs and £98m in extra pension

Susan Anderson, CBI director of HR policy, said: "This pensions
proposal is at best ineffective and at worst very damaging. It will not benefit
employees and employers will get a real administrative headache. Firms will
want to know why the UK is choosing to go beyond the requirements of the EC
directive on fixed term work."

Anderson added most employers normally provide fixed term workers access to
a stakeholder rather than a company pension.

Robbie Gilbert, chief executive of the EFSP, urged the government to
re-think the proposal. He said: "Including pensions in the regulations
will affect the way companies use people on fixed term contracts. It may push
them towards using agency staff rather than direct employment.

Employers have until 12 April to submit their views on the latest draft of
the Fixed Term Employee Regulations, which aim to give fixed term employees the
right not to be treated less favourably than a comparable permanent employee.

By Ben Willmott

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