UK employers trying to dilute pensions reform, warn unions

Aug 31 2006 by Nic Paton Print This Article

British employers are surreptitiously trying to water down government plans that would make it compulsory for them to pay into an employee pension, trade unions have claimed.

The TUC has warned that an "under the radar" campaign by employers to force workers to wait a year before employers have to make compulsory contributions to staff pensions would deprive one in six workers at any one time of a chance to build up a pension.

Earlier this year the British government, in its pensions' white paper, proposed that employers should pay three per cent of an employee's wage into a National Pensions Savings Scheme, unless the employee opted out.

But, said the TUC, some major employers, particularly those in the retail and hospitality industries, were now lobbying ministers to introduce a waiting period of a year before an employee in a new job started to gain from compulsory employer pension contributions.

A TUC analysis of official statistics has suggested that, if successful, this would mean that on any day, one in six workers would be missing out on a pensions' contribution.

Workers in particular who frequently changed jobs would receive a significant reduction in pension contributions over their working lives.

More than one in three workers in the hotel and restaurant sector had not been in their jobs for a year.

And nine out of ten workers in this sector did not have a pension other than state provision.

In the retail sector, more than one in five had not been in their job for a year and nearly seven out of ten did not have a pension, said the TUC.

A 12-month waiting period would particularly hit black and Asian workers, it added.

Nearly one in four Asian workers had been in their jobs for less than a year as had one in five black workers, compared with 17.2 per cent of white workers.

Regionally, London would be worst hit, with 18.9 per cent of its workers (more than half a million) missing out on pension contributions, compared with 14.2 per cent in Northern Ireland.

TUC general secretary Brendan Barber said: "The government was right to face down the employer organisations who opposed compulsory pension contributions.

"But some are now engaged in a last-minute, under-the-radar attempt to rip the guts out of the new pensions system by making staff wait for a year in every new job before they start to build up a pension," he added.

"This might not make a big difference to someone who only has one or two employers in their lifetime, but that has always been rare," he continued.

"And those who most need the new pensions system Ė those in lower paid and less secure jobs Ė will be the biggest losers," he warned.

"The new National Pensions Savings Scheme is not just a modest scheme to encourage a few people to save a bit more, but a pillar of the new pensions' settlement.

"Bosses don't get a year off before they pay the National Insurance contributions that help pay for state pensions and they should not get a holiday before they pay compulsory contributions into work pensions either," Barber concluded.