Unison urges action over pensions gap

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The Independent Online

Unison, Britain's biggest union, yesterday called on the Government to force employers to make sizeable pensions contributions on behalf of staff.

Unison, Britain's biggest union, yesterday called on the Government to force employers to make sizeable pensions contributions on behalf of staff.

The union, which has 1.3 million members, slammed current pension provision in Britain as in "total disarray". It is lobbying for legislation to make it compulsory for large employers to put aside funds equal to 10 per cent of pre-tax salaries every year for pensions. This is the opposite of what is happening, with many companies closing defined benefit schemes or slashing contributions from historic highs of about 10 per cent to less than 5 per cent. Glyn Jenkins, Unison's pensions officer, said: "We want to see compulsion for all employers to contribute, with major employers expected to pay 10 per cent."

The union wants companies offering defined contribution schemes to pay even more into their staff's pension funds. Defined contribution schemes usually cost companies less to provide because they do not guarantee a level of final payment to staff. Many companies are moving to defined contribution – or money purchase – from traditional defined benefit schemes because the latter are becoming increasingly costly for employers to provide.

Defined benefit pensions promise a fixed – usually generous – level of final payout which must be made up by the company if returns on investments in the fund are poor.

Unison also wants to see employees forced to pay into their companies pension schemes if the scheme has generous conditions such as large contributions by the company. The union stressed that it is not looking for "blanket compulsion" and would not favour workers having to pay into schemes that are not boosted by company contributions.

Unison will meet Ian McCartney, the pensions minister, this week.

The Confederation of British Industry criticised compulsion for employers, saying there were plenty of occupational schemes on offer but many younger employees don't want to join them.

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