Forced pensions face pay hurdle

Eight million Britons aren't saving for their old age

Nearly three-quarters of people believe UK workers should be forced to contribute to a private or company pension scheme.

But only one in four said they would support compulsory pensions if it meant they had lower take-home pay.

The idea of making pension saving compulsory has been touted as a way of closing the UK savings black hole.

But this study by the Association of British Insurers ( ABI) indicates that support for compulsion is conditional.

Lower pay

Even supporters of compulsion tend to shy away from the suggestion that they should contribute more than they do at present Joanne Segars, ABI

The ABI found that support for a compulsory pension scheme was strongest amongst older workers earning in excess of £40,000 a year.

At the other end of the scale, support for compulsion was weakest among younger and part-time workers.

If given the choice between a pension funded by compulsory employee contributions or compulsory employer contributions, workers unsurprisingly said they would like their employers to pay.

However when the possibility that employers would try to recoup costs by making smaller pay awards was raised, support for compulsory employer contributions fell from three-quarters to just over one-half.

"Once people start to understand the implications of compulsion and in particular realise that compulsion has to be paid for and is not simply free money, the arguments become less clear cut," said Joanne Segars, ABI head of pensions.

"Even supporters of compulsion tend to shy away from the suggestion that they should contribute more than they do at present."

The ABI recently revealed that eight million Britons are failing to save for their retirement and could face eventual poverty.

A further two million people are saving, but not enough to make a real difference.