Call for pension compulsion

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The Independent Online
THE UK'S big engineering companies are calling on the government to make a fundamental change to the law to allow them to force employees to join occupational pension schemes, writes Andrew Verity.

Nearly three-quarters of engineering companies employing more than 500 people want the Government to bring back compulsory membership as a condition of employment as part of its wholesale review of pension policy.

The proposal, floated in a survey of members by the Engineering Employers Federation, would reverse a key reform of the 1980s, which is blamed by many for prompting the pounds 15bn pension mis-selling scandal.

Financial advisers were only able to mis-sell pensions to employees because of a 1987 decision by the government. A change in the law barred employers from making membership of their scheme a condition of employment.

The call comes just weeks ahead of the Government's Green Paper on pensions reform, now expected to be published in November. The paper will set out the Government's direction on pension policy and outline proposals for the new "stakeholder pension".

Few details are yet known of the stakeholder scheme, except that the government wants it to have low charges and be based on defined contributions. The Government is rumoured to be backing away from the idea of forcing everyone to contribute more to pensions.