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&#39Employer compulsion could bring job losses&#39

Introducing compulsory employer contributions on pension schemes would be a mistake, which would lead to the loss of thousands of jobs, says the Society of Pension Consultants.

The SPC is warning Adair Turner&#39s compulsion commission that the additional cost of contributing to an occupational scheme could be enough to push many companies into liquidation.

It says comparisons should not be drawn with Australia just because its economy resembles the UK. The SPC says the UK already has more compulsion via the state system through 10 per cent National Insurance on employer and employee while Australia only has 9 per cent compulsory contribution to private schemes through the workplace.

The SPC says in other countries where there is compulsion – mostly South American and former communist countries in Central and Eastern Europe – compulsion was introduced to replace generous state pensions which could no longer be afforded.

But in many of these countries, says the SPC, only around half of the workforce are in occupational schemes because the cost means people try to evade the system.

SPC president Donald Duval says: “Compulsion is not a good idea because the additional costs may push some companies over the edge and people will lose their jobs. When it comes down to it, jobs are more important than pension contributions. There is little point in trying to provide retirement funding for people if they can&#39t afford to live now.”

Intelligent Pensions director Steve Patterson says: “The question of whether compulsion will lead to job losses is academic. What is the alternative? If stakeholder fails, are we going to accept an ageing impoverished sector of the community? Compulsion seems inevitable in the long run.”

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