LONDON - One of Britain's main employers' organisations has come out in favour of a mandatory contribution pension scheme in a move immediately welcomed by the nation's umbrella union organisation.
The Engineering Employers Federation said Britain should have an enhanced basic state pension and employers should be forced to make
minimum contributions as should employees. Its embrace of compulsion comes ahead of a keenly awaited report on reform options by the Pension Commission panel.
Pensions have increasingly become a hot issue in Britain as the combined effects of an ageing population, rising life expectancy, the stock market correction in 2000-2002 and low bond yields have put pressure on the state and private-sector retirement systems.
The proposal clashes in part with views held by the nation's largest employers' group, the Confederation of British Industry, which maintains that there should be no further pressure for mandatory contributions but instead incentives to save.
The Trades Union Congress, which oversees unions representing 6.5 million workers and has lobbied for better, mandatory pensions, welcomed the proposal.
"This is a hugely significant report," said TUC head Brendan Barber.
"For the first time, an important employer organisation has broken ranks and come out as a supporter of pensions compulsion. No longer can other employer organisations pretend that business is united."
Under the Engineering Employers Federation's basic state pension proposal, workers retiring at 65 would get 21 per cent of average earnings. That would rise to 25 per cent at 75.
Compulsory contributions by employers and employees would start at 2 per cent of earnings in 2015, rising to 4 per cent by 2025.
The Department for Work and Pensions says some 10 million working age Britons are not saving enough for their retirement.
- REUTERS
