CBI calls for more pensions support

The Government's proposed pension reforms are destined for failure unless employers are provided with a "comprehensive support package", the CBI director-general, Richard Lambert, will warn today.

Speaking at his first Labour Party conference, Mr Lambert will urge the Government to soften the blow of its pension reforms by providing help for smaller businesses, and support for larger companies which have existing pension arrangements.

The Government plans to auto-enrol all staff into a private pension scheme from 2012, forcing employers to contribute 3 per cent to each employee's pot. However, Mr Lambert will warn there is a serious risk of companies encouraging staff to opt out of the scheme if the plans are not made affordable. Companies with existing schemes will be forced to cut contributions if the proposals are not watered down.

"The CBI supports the broad thrust of the pensions White Paper ... but there are dangers of unintended consequences which could undermine this aim," Mr Lambert will say. "Many smaller firms will find the sheer cost of compulsion difficult to absorb and they will need targeted financial support.

"Our proposals would give £850m of support to small firms. This is a fraction of the £4bn-a-year windfall the Government will save by ending the contracted-out rebate."