TUC calls for compulsory pension contributions

The Trade Unions Congress, the Consumers' Association and the charity Help the Aged are pushing for compulsory pension contributions ahead of the Government's pensions Green Paper, published tomorrow.

The groups all say Britain is facing a pensions crisis and that the basic state pension is not keeping up with living standards. They point to the increasing number of employers that are abandoning their final salary schemes in favour of making much lower contributions to money purchase alternatives.

They are calling on the Government to recognise that employers and employees who can afford to do so must play their part in providing for retirement.

"Britain's pensions crisis runs deep, and requires urgent action. The Government must take notice of this wide coalition with so much in common," said John Monks, the TUC general secretary.

The organisations believe the simplest and most effective way to do this will be to phase in compulsory pension contributions from employers and individuals.

A survey by the Engineering Employers Federation last week showed more than half its members supported compulsory contributions.

But the Government is expected to downplay the extent of the pensions woes, saying Britain remains well funded for retirement. This goes against the findings of the ABI, which found there is a £27bn gap between what people are saving for their retirement and what they need to. It will, however, put compulsory saving on its agenda by admitting the current voluntary system is not working.

A complete overhaul of the system is unlikely, but the Government is expected to propose allowing people to work beyond the age of 65. This would allow them to draw their pension from the company and continue working reduced hours for that employer.

The three organisations say the Green Paper must construct a secure framework for pensions that allows people to plan for retirement with confidence, and enables the retired to maintain a decent standard of living.

The three groups want to see an unequivocal commitment to maintain the basic state pension, which should guarantee a reasonable minimum income for all pensioners. They also want more help for Britain's oldest pensioners.

They want the number of pension schemes reduced and the Government to widen the access to advice and information. The Government will be publishing alongside the Green Paper the outcome of a review of the tax legislation surrounding pensions that should cut some of the unnecessary red tape weighing down savers.