Pension plans spark outcry

IT'S not often that union leaders and business bosses line up on the same side of an argument but pensions reorganisation seems to have achieved just that.

The extent of Britain's pensions crisis was underlined today after threats from both employers and workers that they would all oppose new proposals to tackle the problem.

Business leaders warned the Government today that they will fight any plans to force employers to contribute to workers' pensions. And public sector workers' unions threatened strike action if plans to get rid of their members' final salary pension schemes are enacted.

A task force set up by ministers last year to consider how employers could help increase pension provision will publish its findings later today and is believed to have concluded that compulsion may be the only solution to the UK's pensions crisis.

The group, headed by former Sainsbury's chairman Sir Peter Davis, is understood to have decided that too many employers were ducking their responsibilities to offer decent retirement provision.

The report will add weight to calls from trade unions that firms should be forced to pay into an occupational pension.

The extent of the pensions crisis facing Britain will also be underlined as leaders of public sector unions meet to draw up a campaign of action against 'attacks' on their members' pensions. The issue could spark strikes in the run-up to the next General Election.

Officials from unions representing teachers, firefighters, council workers, civil servants and NHS staff will discuss co-ordinating any action against the Government.

Controversial plans to axe the final salary pension scheme and increase the pension age for civil servants, unveiled by ministers last week, have increased the prospect of industrial action ahead of the General Election, which is widely expected to be in May.

Unions also fear big changes to the pensions of other public sector staff, including council workers.

Dave Prentis, general secretary of Unison and chairman of the TUC's public service committee, said: 'Our aim is to get talks going with the Government at the highest level to protect public sector pension schemes. But make no mistake, we will not sit back and allow them to tear our members' pensions to shreds.

'Today's meeting will decide on a united response. I know that Unison local government members are angry about plans to rush through the changes by next April. Our pensions are not gold-plated. The average pension for a local government worker is only ?3,800.'

Employers, meanwhile, appeared robust about opposing the latest pension proposals. Bill Midgley, president of the British Chambers of Commerce, said: 'Our members would be extremely concerned if the report was to recommend compulsory pension contributions on the part of employers.

'Compulsion would simply increase the cost of employing people and could harm job creation and the UK's overall competitiveness.

'Small firms in particular would feel the added financial burden of compulsory contributions. Some would be forced to cut costs in other areas to make ends meet, most notably by reducing employees' salaries. This could cause no end of problems in employer-employee relationships.

'Compulsion would be a knee-jerk reaction to the problem of under-saving. The voluntary system can work, provided that the right framework exists to encourage private saving.'That means replacing the inadequate and complex State pension with a higher, flat-rate system and additional incentives that encourage both employers and employees to make private contributions.'