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Latest NewsPay & benefitsPensions

TUC opposes employer bid to delay compulsory pension contributions

by Mike Berry 31 Aug 2006
by Mike Berry 31 Aug 2006

An ‘under the radar’ campaign to force workers to wait a year before employers make compulsory contributions to staff pensions would deprive many employees of the chance to build up a pension, the TUC has warned.

The government’s Pensions White Paper proposes that employers should pay 3% of an employee’s wage into a National Pensions Savings Scheme unless the employee opts out.

The TUC has learned that some major employers, particularly in retail and hospitality, are lobbying ministers to introduce a waiting period of a year before an employee in a new job starts to gain from compulsory employer pension contributions.

But a new TUC analysis of official statistics shows that, if successful, this would mean that on any day, one in six workers – about 4.3 million people – would be missing out on a pensions contribution.

Workers who frequently change jobs – as is common in some sectors – would therefore receive a significant reduction in pension contributions over their working lives, the union group warns.

The TUC said more than a third of workers in the hotel and restaurant sector have not been in their jobs for a year. In retail, more than one in five have not been in their job for a year.

General secretary Brendan Barber said: “The government was right to face down the employer organisations who opposed compulsory pension contributions. But some are now engaged in a last minute, ‘under the radar’ attempt to rip the guts out of the new pensions system by making staff wait for a year in every new job before they start to build up a pension.

“This might not make a big difference to someone who only has one or two employers in their lifetime, but that has always been rare. And those who most need the new pensions system – those in lower-paid and less secure jobs – will be the biggest losers.”

Firms don’t get a year off before paying National Insurance contributions, so they should not get a payment holiday on pension contributions either, Barber said.

Mike Berry

https://www.personneltoday.com/Articles/2006/03/13/33735/Pensions+Watch+changes+to+occupational+pension+schemes.htm

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