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Last Updated: Wednesday, 30 November 2005, 13:22 GMT
'Hard-headed' pensions shake-up
Pension book
More than 12 million workers are not saving enough for retirement
Plans to make Britons work longer and save more to pay for their retirement have drawn mixed reactions.

The TUC called the Turner report "bold and hard headed", criticising the rise in the state pension age but praising compulsory employer contributions.

The CBI described compulsion for employers as its "sting in the tail" which would upset many small and medium sized businesses.

But industry was unanimous that the present pension system was flawed.

"It's crystal clear from today's report that there is no alternative to saving more and working longer," said the CBI's director general Sir Digby Jones.

"The nation simply cannot afford for people in the public or private sectors to retire at ages set decades ago."

A gradual rise in the state pension age to 68 was put forward as part of the shake-up.

This is compulsion by the back door and would be bad for businesses
David Frost, BCC

The TUC said it remained opposed to any increases in the state pension age that would make manual workers and the poor worse off.

"They should not have to pay for a new pensions settlement," said TUC general secretary Brendan Barber.

Compulsion doubt

The report from the Pensions Commission has also proposed a national pension savings scheme (NPSS), which people would be automatically enrolled into.

The British Chambers of Commerce (BCC) said it was "very disappointed" to see the speculation that employers would be expected to pay into the NPSS alongside employees had been right.

"This is compulsion by the back door and would be bad for businesses, their employees and the UK economy as a whole," said the BCC's director general David Frost.

Lord Turner
Lord Turner's commission spent three years looking at pensions

"It could be a real nightmare for small firms in particular, who are already struggling to cope with the demands that the already complex payroll system places on them."

The Institute of Directors also opposed compulsion, while The Federation of Small Businesses (FSB) agreed that compulsory employer contributions would lead to wage cuts and job losses.

Meanwhile, the EEF - representing manufacturing employers - said it supported the idea of so-called 'soft compulsion' in which employers have to offer pension schemes but employees have an opportunity to opt out if they choose.

The CBI agreed that it was "absolutely right" for workers to be able to choose whether they can afford to pay for a pension.

"But companies must get a choice too. Under today's plans the only opt-out available to some struggling smaller firms may be to shut up shop," said the CBI's Sir Digby Jones.

'Better foundation'

There were more positive responses to the Commission's proposals for reforming the state pension system.

Increases in the state pension age will be essential to keep the increase in public expenditure within limits

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"A higher basic state pension that is less reliant on means testing will provide a much better foundation for individuals to build private savings," said the BCC's David Frost.

And most agreed that raising the state pension age was a crucial part of paying for a higher basic state pension and was a "wholly logical response" to increasing longevity.

The TUC said there were "no pain free solutions to pensions".

"Employers, employees and the states, through tax revenues, must all play their part," said Brendan Barber.

'Fairer deal'

The Turner report was praised by the Equal Opportunities Commission (EOC) for offering a fairer deal for women.

It said the Pensions Commission had "risen to the challenge of women's pensions".

Perhaps if pensions were safe from greedy politicians it would encourage more of us to save
Kyle R, Cardiff

The Commission, the EOC said, had established the "principle of universality" in the basic state pension, with an improved second state pension benefiting women in particular, carers and the low paid.

And it noted that improved private sector pensions would provide more flexible pension products for those who spend time out of paid work, such as pregnant women.

However, the charity, Age Concern, urged the Commission to help pensioners who were already struggling in poverty. It said the government's pension policy should be fair to "different generations and people with different life and work experiences".

"[Lord] Turner is right to say the solution to the pensions crisis must be a combination of more tax, longer working lives, and higher private savings," said Gordon Lishman, director general of Age Concern.

"A clear timetable for action is now needed to protect future generations while continuing to tackle poverty among today's pensioners."

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