Pension shake-up needed

By THIS IS MONEY
Updated:

 

A LEADING business group today urged a radical overhaul of the UK's pensions system, including compulsory contributions by workers and employers.

The Engineering Employers Federation (EEF) said a new structure was needed by the year 2015, involving the Government, firms and employees taking responsibility for future provision.

In a submission to the Pensions Commission, the EEF, which represents 6,000 manufacturing firms, said the basic state pension should be enhanced and linked to average earnings.

A national scheme should be introduced based on compulsory minimum pension contributions of 2% of earnings from employers and workers, increasing gradually to 4% by 2025, it was argued.

Private sector pension provision should not be subjected to "burdensome" regulations, according to the EEF.

Alan Wood, EEF president and chief executive of Siemens, said: 'We have to recognise that putting a sticking plaster on the current pensions system is no longer an option and that government, employers and employees will all have to play their part in the future funding of pensions in the UK.

'We now need a frank and open debate so that all parties understand the various options for addressing this important issue as we seek to build a consensus on the way forward.

'Our fully costed, three-pillar approach sets out a constructive and realistic solution to the UK's pensions problems. It is a modern, flexible approach that reflects the changing nature of today's labour market and society.'

The federation said it believed the proposals would address the risks firms faced in running occupational pension schemes.

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