CIPD challenges plan for compulsory pensions…

A proposal allowing employers to force staff to join company pension schemes
has been challenged by the CIPD.

The recommendation is part of a report by Alan Pickering, former chairman of
the National Association of Pension Funds, to be presented to ministers later
this month as part of the Government’s review of pensions.

Duncan Brown, assistant director general at the CIPD, believes the idea is
not appropriate in today’s employment market. "You cannot dictate a single
solution in a highly complex employment market," he said.

"For an employer with low turnover and long service among staff it
could be a lot of good. But do they want to save this way in a call centre with
an average staff age of 21 – and should they be forced to?"

Instead, Brown urged HR professionals to educate employees about the value
of pensions and how much they will need to save for retirement.

Employees gained pension flexibility in 1988 when compulsory membership of
employer pension schemes was scrapped and personal pension plans introduced.

– Last week the European Commission invited comments on ways to ensure staff
crossing into other European countries do not lose out on pension rights.

It launched a public consultation on removing barriers to staff mobility
caused by the loss of rights in EU members’ supplementary pension plans.

The consultation will look at current pension rules that discourage members
from changing jobs across EU states.

… while TUC champions them

Employers should be forced to pay twice as much into staff pension schemes
as their employees according to a report by the TUC.

Prospects for Pensions, published this week, shows that in the past 10 years
the number of employees covered by final salary pension schemes has dropped by
2 million to 3.8 million staff members.

To compensate, the report calls for employers to make double the
contributions made by staff to employees’ pensions. It also calls for employers
to make compulsory contributions to occupational pension schemes and make
joining the company pension scheme a condition of employment.

John Monks, TUC general secretary, said: "We need a partnership between
employers, the state and staff, backed up by legislation to ensure that
millions of people do not spend their hard-earned retirement in poverty."

The report accuses employers of failing staff by not accepting their pension
responsibilities and of giving in to a ‘herd mentality’ in shutting down final
salary schemes.

Iceland, Ernst & Young, Marks & Spencer, BA and House of Fraser are
among those who have frozen or stopped their final salary schemes in the past

A further one in five final salary pension schemes are set to close to new
members over the next year according to research. The survey of 269 pension
schemes in the public and private sector by the Pension Fund Partnership and
MRM Projects also finds 20 per cent of final salary schemes are already closed
to new members.

Comments are closed.