The government must be prepared to offer small businesses financial help when the new personal accounts pension scheme is introduced, it has been claimed.
According to manufacturing body EEF, the government risks losing support from the small business sector for its package of pensions reform by continuing to ignore their case for financial assistance.
The government plans to make pensions compulsory by automatically enrolling all workers not in occupational pension schemes into personal accounts or an employer-sponsored scheme by 2012.
Under the proposed system, staff will pay 4% of their salaries into the schemes and employers 3%, with the government providing an extra 1% in tax relief.
According to the Department of Work and Pensions, around seven million people are not saving enough for retirement, and the personal accounts system seeks to rectify this.
However, EEF has urged the government to consider the needs of the small business sector in response to the consultation on the White Paper, Personal Accounts: A New Way to Save, which closed this week.
“Whilst the White Paper’s proposals are broadly heading in the right direction, we remain concerned that the government is continuing to ignore the need for some form of initial financial assistance for smaller employers when personal accounts are introduced,” said David Yeandle, deputy director of employment policy at EEF.
“This could risk the government failing to gain their active support which will be critically important for the successful introduction of personal accounts.”
However, the organisation welcomed several specific proposals outlined in the White Paper, such as simple and transparent criteria for exempting employers with ‘good’ occupational pension schemes from having to auto-enrol their employees into personal accounts.
© Crimson Business Ltd. 2007
