TUC call for compulsory pensions to end crisis

Britain’s pensions crisis will not end unless employers make compulsory contributions to occupational pensions, and workers join the company scheme as a condition of employment, say the TUC.

The call came as part of the TUC's new report 'Prospects for Pensions' in which the union called for a national pensions debate and proposed that employers pay twice as much as workers into their pension fund.

The report accused employers of giving-in to a 'herd mentality' in shutting down final salary pension schemes and called on both bosses and the state to live up to their responsibilities on pensions.

TUC General Secretary John Monks said: "Individuals can never save enough to fund a secure retirement. We need a partnership between employers, the state and workers, backed up by legislation to ensure that millions do not spend their hard-earned retirement in poverty."

The report revealed that more than half of Britain’s workforce are not in an occupational pension scheme. In the past 10 years those covered by final salary schemes has dropped by nearly two million to 3.8 million.

While the pensions crisis is not new, it has been growing for a decade, the introduction of new accounting requirements has enabled employers to accelerate the closure of final salary schemes.

The Prospects for Pensions report also called for:

• All workers to have access to a quality pension whether provided through a final salary, defined contribution or stakeholder scheme
• A return to pension provision based on the principle that responsibility for retirement provision should be shared by the state, employers and individuals.

With final salary schemes fast disappearing from the pensions landscape, the report in part blamed the ending of employers’ contribution holidays.

The TUC said that the government had made some progress in addressing the weaknesses in the pensions system, but that more remains to be done and the union called for a sprit of shared responsibility. The union asked for consideration to be given to introducing compulsory employer contributions to occupational pensions with employers able to make pension scheme membership a condition of employment for employees.

However, the union pointed out that workers on low to modest incomes may find it hard to maintain their current commitments and save for a pension, and called for fiscal incentives, including a pension tax credit, to make saving more affordable for lower paid employees.

(SP)