The human resources consultancy, Aon Consulting has claimed that it would cost the government over £4 billion in tax relief if it made saving into a company pension scheme compulsory. The company have said that it would cost the government extra money, if staff were forced to pay 9% of their earning into a retirement fund, as cash that would previously gone in taxable wages or profits would go into pension saving which attracts tax relief. While over time, this would increase private pensions and reduce the need for pension credit in the short term the government would face a severe drop in income, which would need to be made up in other ways.
Our view
The costs may be so, but we suggest this is far less than the costs on the public in later years if people have limited pension provision and claim benefits. Remember, as we age as a population, the shape of politics will change and the pensioner will have more say, if they are in poverty they will vote accordingly, the costs to sustain a poor, aged, population could be huge. Compulsory pension contributions will be here sooner than we think.