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Workplace pension reforms ‘need to be simplified’, warns CBI

 

The Confederation of British Industry (CBI) has welcomed the Government’s plans to reform workplace pensions, but called for the measures to be simpler and more flexible.

 

From 2012, employees will be automatically enrolled into a pension scheme and their employer will be required to contribute a minimum of 3% into the fund.

 

The Government is also introducing the National Employment Savings Trust (NEST) as an alternative for employers that do not set up their own pension scheme.

 

However, the CBI has rejected the Government’s plans to exempt micro-businesses from the changes, claiming that firms which employ fewer than five staff make up 95% of businesses.

 

‘Most of these firms currently offer no pension provision, so an exemption would mean the reforms fail to tackle the underlying problem of too few people saving for a pension,’ it said in a statement.

 

The CBI added that it would instead like to see a ‘sweeping programme of simplification’ and is calling for auto-enrolment to kick-in only three months after someone has started a job.

 

In addition, it suggests simplifying the NEST charging structure and providing incentives for companies to operate better schemes.

 

‘Although some improvements have been made to the Government’s plans, they are still too rigid and inflexible, and include unnecessary red tape,’ commented Katja Hall, the CBI’s Director of Employment policy.

 

‘Firms need 18-24 months to comply with the new regulations so will have to start preparing from October this year. We need clarity on this critical issue, and soon’.