LONDON: If the Turner Commission’s recommendation of a national pension scheme gets implemented, Labour is likely to lose much more than the confidence of businesses.
One of the Commission’s recommendations could run as far as making families pay 3 percent of their nannies’ salaries into a national pensions scheme, officials said. The proposal of a national pension scheme gives the employee the right to opt out but the employer has no such option. Small businesses would find it particularly unaffordable.
The report due to be published on Wednesday, will suggest a ‘Britsaver” scheme that is modelled on the New Zealand’s ‘Kiwisaver’ where the employee is automatically enrolled into the scheme and has to contribute 3 percent of his salary into the fund and employers would have to contribute up to 5 percent while the government contributes an additional 1 percent.
This scheme would be apart from the National Insurance contributions to which were raised by 1 percent in 2002.
Lord Turner’s proposal is certain to run into trouble as hundreds of thousands of small businesses do not fund pensions for their employees. They could be compelled to contribute for all their employees. If the rule were to be extended it would mean middle-class couples who hire nannies find their child rearing expenses raised by up to 3 percent.
Sir Digby Jones, director general of the CBI lashed out at the pensions Commission saying it was “wrongly founded and muddle-headed”.
Small businesses would be particularly upset with the government for imposing such a scheme and it would hit employment. Business leaders also said they might have to sack staff if the government imposes the proposed national pension scheme. Sir Digby warned unions against agitating for compulsory contributions.
Last month, the government had given in to a backlash to proposal that retirement for workers in the public sector be raised to 65. The CBI had reacted sharply to the government’s surrender to the unions’ opposition to the proposal. Whitehall officials denied there were reports that the government would reconsider its decision about the public sector pensions deal.
Posted
on : Mon, 28 Nov 2005 16:15 GMT | Pensions News
By : Paula Jenkins
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