The CBI, the UK's largest business group, has asked the government to pledge GBP850 million in support for small businesses to help them to comply with new pensions proposals.
Richard Lambert, director-general of the CBI (Confederation of British Industry), warns that the proposed legislation, which includes automatic pension scheme enrolment and compulsory company contributions, will be hard for small firms to adopt and could undermine existing pension schemes.
Our proposals would give GBP850 million worth of support to small firms for the benefit of their employees. This is a fraction of the GBP4 billion a year windfall the government will save by ending the contracted-out rebate for defined contribution schemes. All of this GBP4 billion should be ring-fenced to support private pensions savings – with helping the smallest and most vulnerable firms the number one priority, said Mr Lambert at the Labour party conference in Manchester.
The first of the new pension schemes are expected to come into force in 2012, and the CBI has urged the government to use the time in the interim to ensure businesses are well supported.
The CBI also proposes that compulsory employer contributions are phased in over three years with a commitment from the government to maintain the contribution level at 3% of the employee’s salary.