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Pension Panel Opts For Forced Saving
Jill Treanor, The Guardian
August 30, 2004
A government advisory body is preparing to recommend that pensions saving should be compulsory through workplace schemes.
The employer taskforce on pensions may suggest that employees are automatically enrolled into company pension schemes rather than be given a choice about joining.
Mary Francis, director general of the Association of British Insurers, who sits on the panel, said it was "quite likely" it would tell ministers that compulsion was necessary to help plug the £27bn gap between what is saved and what is needed for old age.
Compulsory pensions saving is being considered by Adair Turner, the former director-general of the CBI who now chairs the pension commission set up after the 2002 white paper.
An interim analysis is expected this autumn, although his final report is not scheduled until after the next election.
The employer taskforce on pensions - born out of the white paper and chaired by Sir Peter Davis, former chairman of Sainsbury's - is due to make its recommendations by December.
Ms Francis made her comments as the ABI prepared to publish research into the public's attitude towards compulsory pension saving.
In the first of a series of papers ahead of Mr Turner's report, the ABI has tried to unravel statistics that show 70% of people support compulsion, in principle. The ABI found that only 26% of working adults - about 6.5m people - actually support compulsion that would affect their current saving patterns, while 17% see it as a bad idea at any level.
A system of compulsory employer and employee contributions was found to be the most acceptable. However, the CBI has already rejected calls by the TUC that it be made compulsory for employers to pay into pension schemes.
At present, employees have a choice about joining an occupational pension scheme. Even without compulsion, Ms Francis urged employees to take up any opportunity to join a final salary scheme, where retirement benefits are based on an employee's last pay cheques.
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