Guarded welcome for pension reforms

The Federation of Small Business has today welcomed the Government’s plans for UK pensions.

The Federation's Policy Chairman Wilfred Mitchell said that business organisations noted the Government’s assurance ahead of today’s white paper that small businesses would get help to cope with possible compulsory contributions to a national pensions saving scheme.

However, the FSB urged MP’s to put measures in place to encourage individuals to take responsibility for their own retirement.

Wilfred Mitchell, FSB Policy Chairman, said: “Everybody recognises the need to tackle the future of pensions and the Government has done well to grasp the nettle on this issue.

“The Government’s stated aim has been for individuals to take responsibility for their own futures and we hope this is reflected in the final settlement.

“Our discussions at number 10 Downing Street today saw all the business organisations united in their concern about the impact the proposals would have on small businesses and their employees.

“Good communication and simplicity is the key to making this work. We welcome the time the Government is giving to this debate and look forward to being fully involved in representing the views of small businesses.”

Commenting on the White Paper, the Minister for Social Development, David Hanson said: “The White Paper sets out our proposals aimed at establishing a structure for the pension system that will stand the test of time. It builds on the action we have taken since 1997 to lay a foundation to help this and future generations to work and save for a long and healthy retirement.

“We set out five key tests that the pension reforms must meet. They must be fair, promote personal responsibility, provide greater simplicity so that responsibilities and choices are clearer, be affordable and offer a sustainable solution that commands consensus. I believe the proposals meet these tests.”

Included in the proposals are: a new pension saving scheme of low-cost, portable personal accounts with overall minimum contributions levels of 8% (including an employer contribution of 3%); automatic enrolment for all employees into either the new personal accounts system or an occupational pension scheme that meets a minimum standard; and less administrative complexity.

The basic State Pension will be increased in line with earnings.

Mr Hanson said the proposals would also tackle many of the problems which women face under the current pension system.

He said: “The proposals strike a new balance between the state, employers and individuals in sharing responsibility to provide for the future. I believe the balance is fair to society as a whole.”

(SP/EF)