Businesses will be forced to make job cuts and reduce pay levels to foot the bill for rising costs if pension contributions become compulsory for employers, an employment expert has warned. Richard Smith, employment services director at employment law advisers Croner, said that under the new Turner proposals employers were facing a ‘lose-lose’ situation. “Not only will employers have to make significant efficiency cuts to bridge the pensions gap, there is no firm evidence either to say that promoting pension contributions as an employee ‘perk’ has any positive effect on recruitment, retention or motivation.” “SME employers have nothing to gain from Lord Turner’s recommendations,” he said.
He also warned of private sector staff migrating to the public sector for greater job security and a better work-life balance.
“If private sector businesses are compelled to contribute to pensions, all employers will find this money from planned payroll budgets. This will mean they will have to explore ways of improving efficiency, which could include job cuts and lower wages,” Smith warned.
