CBI labour market economist, Lena Tochtermann, called on government to stop tinkering with pensions and focus on getting the big issues right. By Pam Atherton
“We think there’s been a bit too much happening, which creates complexity for business. Sometimes it feels that legislation is being rushed and without evidence of the benefits,” Tochtermann said.
She said employers wanted help with DB schemes and while welcoming the government’s new economic objective for TPR in the Pensions Bill, it needed to feed down into conversations that case workers were having with CBI members. She added that the Government seemed intent with pushing ahead with promoting defined ambition when there was very little appetite for it from employers.
Tochtermann said deficits were rising, partly due to QE and its impact of gilt yields and the discount rate that pension funds use for funding purposes. “TPR is taking a uber cautious approach which matters not only for business, but for the economy. 50 per cent of employers said it had had an impact on their business decisions.”
The trade body broadly welcomed the reform of the state pension scheme but wanted it to be cost neutral for business. Similarly, the CBI supported the introduction of auto enrolment but its introduction had not been “a walk in the park.”
“The government estimates that AE will cost £2bn-8bn and it is not just the cost. The administration has been quite challenging around opt out notices, confusing deadlines and definitions which are incompatible with existing systems,” she said.
Tochtermann said employers were worried that AE would not provide workers with adequate pensions and that employees were not contributing enough, although nothing would compensate for lack of member engagement.
She said CBI members had not been aware of consultancy charging, that demand for defined ambition had not been “anywhere near as high as the minister believed,” and viewed the guarantees proposal as unhelpful.
Asked from the floor about the CBI’s view on compulsion and whether CBI members were pressing to put a stop to auto enrolment post 2015, Tochtermann said compulsion would be “much tidier” than auto enrolment and thatworkers should have access to a company pension scheme, irrespective of the size of their employer.
The CBI recognised that some workers would be worse off under the changes to S2P, but that there were winners and losers with any reform.