Pension reform 'urgent' says CBI

Planned reforms to the pension system are needed immediately so employers know where they stand, the Confederation of British Industry (CBI) has said.

The CBI is calling on the Government to bring forward the reforms which are due to be rolled out in two years time. Delaying them will impact negatively on employers and employees and fail to tackle the issue of under-saving for a pension, says the industry body.

As of 2012, automatic enrolment of employees into a pension scheme will take place and employers must contribute a minimum of three per cent. As an alternative for employers that do not set up their own pension scheme, the government will roll out the National Employment Savings Trust (NEST).

However, the CBI is keen to avoid what it terms a 'two-tier' pension scheme and is calling for an all-encompassing NEST scheme which will help all employers deliver provision, whilst also ensuring employers make contributions.

Katja Hall, CBI director of employment policy, said; “Automatically enrolling people into pension schemes is the right thing to do, but the reforms must cover all employers and be easy to implement.

“These reforms should be treated in the same way as other new employment rights, where the same rules apply to all.”

The reforms also need tweaking, the CBI continued, and that auto-enrolment should kick in after three months on the job, rather than immediately, minimising costs to employers of auto-enrolling staff who then decide to opt out.