The CBI today said that the Turner Report on pensions “shatters the illusion that there is a single magic solution” to the pensions crisis.
The interim findings of the government’s Pensions Commission found that more than 12 million people are not saving enough for retirement, and that an extra £57m a year needs to be pumped into pensions through government and private funding to fill the gap.
John Cridland, deputy director-general of the CBI, said: “This appears to be a spot-on analysis. The report shatters the illusion that there is a single magic solution to the pensions crisis. Compulsion would be a complete blind alley.”
The TUC has called for compulsory employer and employee pensions contributions to increase the numbers of people saving, saying the voluntary approach to pensions saving “has had its day”.
Cridland said preventing poverty in old age would require a mix of self-help, employer-help and government-help.
“A bigger role for the state is inevitable,” he said. “The Government must not shy away from radical options, and Adair Turner is right to highlight the need to embrace a varied approach, rather than focusing on one option as a total panacea.”
The CBI wants the state pension increased by 32 per cent to the level of the pensions credit – a rise from about £80 to £105 a week in today’s money. They claim this would eliminate pensions means-testing, and encourage more people on low incomes to save.
The Employers Organisation says the Government could partly pay for this by gradually raising the state pension age to 70 between 2020 and 2030.
The CBI also called on employers to do more to modernise pensions by combining where appropriate parts of defined benefit and defined contribution schemes.
It recommends that firms should contribute to pension schemes with employees where they can afford to, and welcomed the Government’s recent acceptance of proposals that firms should automatically opt-in new employees to company schemes.