CBI calls for pensions overhaul

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The Independent Online

The CBI will urge business tomorrow to overhaul its approach to pensions.

In a report called Raising the Bar, the industry body lays out a series of best practice guidelines it believes the business community should adopt.

These include automatically opting employees in to pension schemes, equal access to schemes for all staff - from the most senior executives to the lowest-paid employees - and a more flexible approach to retirement ages. It also calls on all employers that can afford to, to make contributions to workers' private pensions.

The Government has welcomed the guidelines. Andrew Smith, the Secretary of State for Pensions, said: "I share the CBI's view on the key role employers have to play in helping employees to save for retirement and I welcome its call for every company to redouble its efforts on pensions."

The CBI launched the study after consulting its members. Its deputy director-general, John Cridland, said: "The concern was that business has had a difficult time on pensions. We needed to find out why there was low take-up. Most employees have limited knowledge about pensions, find the choices confusing and all look for as much help from their employer as they possibly can."

Pension provision has become a controversial subject in recent years. Turbulent equity markets pushed funds into the red, forcing companies to close final salary schemes in favour of defined contribution plans, which put more emphasis on the individual to make regular investment decisions.

In addition, life expectancy is rising and fears are growing that people are not saving enough for their old age.

Mr Cridland said the report endorsed automatic opt-in as it "addresses the fundamental problem - too many people are not saving enough".

Companies should adopt a more flexible attitude to retirement ages to lighten the burden further, he added. Meanwhile, allowing equal access to schemes was "part of the bigger debate about shareholder activism and how boards can convince investors that they are operating best corporate governance".