The Engineering Employers Federation (EEF) has called for some pension contributions to be made compulsory for both employers and their staff.
The manufacturers’ organisation is the first major business organisation to suggest that compulsion be introduced to solve the looming pensions crisis.
Its plan is outlined in a package of pension reforms submitted to the Pensions Commission.
The proposals suggest that employers and individuals should eventually both be compelled to contribute at least 4% of a workers income into a new national scheme of investment funds.
The plans, costed by the Pensions Policy Institute, also include an enhanced state pension system that would provide at least 21% of national average earnings at the age of 65.
Other employers’ organisations, such as the CBI and the British Chambers of Commerce, have opposed compulsion. They have argued it would lead to greater costs for employers.
TUC general secretary Brendan Barber welcomed the call for compulsory contributions.
“This is a hugely significant report. For the first time an important employer organisation has broken ranks and come out as a supporter of compulsion,” he said. “No longer can other employer organisations pretend that business is united.”
The Pensions Commission will publish its second report by the end of this November.