According to the Confederation of British Industry (CBI), the National Pensions Savings Scheme would be unaffordable for many businesses. In their response to the Pensions Commissions proposals, the confederation has pleaded with the Government not to make companies contribute to the scheme. Instead, they support a 'pension builder' plan to increase pension contributions, with additional support for small businesses.
The CBI have said that they agree with 'soft-compulsion' for employers, but making them contribute could result in some smaller companies going 'bust'. Under the proposed Pension Builder Scheme, employees could put a percentage of their annual pay rise from gross salary into pension plans.
They have also called for either 'partnership pensions', in which smaller employers would have part of their contribution paid by the Government, or a 'pension tax credit' to reduce costs for the employer.
Our view
The National Pensions Savings Scheme, much in the same way as Stakeholder Pensions, is fundamentally. If anyone thinks that a reduction in the annual charge to 0.5%pa on your pension will encourage you to save any more than the 1.0% charge of Stakeholder, then think again.
The only way people will save is by education and by being forced to save - i.e. some form of compulsory pension. We already do so with National Insurance and the State Pension - so this is the only way - the problem is the country cannot afford it.
Yet again though, the Government will 'pass the buck' to the hard pressed small business man. Make no mistake - the NPSS will fail.
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