CBI outlines its own take on pension crisis

The CBI has urged the government not to enforce compulsory pension contributions from employers as recommended by the Pensions Commission.

Under Lord Turner’s proposals for a National Pensions Savings Scheme (NPSS), employees would contribute 5% (1% being National Insurance tax relief) with employers forced to add 3%.

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But the CBI said this was unfair, instead recommending three alternatives:

• 
  
  A ‘Pensions Builder’ to boost employee contributions. Businesses would still donate 3% and the individual would pay 5%, but these amounts would be supplemented by a one-off transfer or part of an annual pay rise into their pension.
  
  
• 
  
  A ‘Partnership Pension’ to support smaller employers which would still contribute 3%, but have 1% paid by the government. Employees would also contribute 5%.
  
  
• 
  
  A ‘Pension Tax Credit’ where employers would still donate 3%, but receive a tax credit based on 150% of their contribution. The employee would still contribute 5%.

The CBI estimates it would cost £475m a year to implement its proposals.