The CBI is on a collision course with the Government over pension compulsion.
At the CBI pensions conference, Work and Pensions Secretary Alan Johnson said: “We are focusing our attention on compulsion and there are things we could and should do on compulsion in the short to medium term.”
Johnson said the DWP will look at the different ways that compulsion could be carried out between now and Pension Commission chairman Adair Turner's second report, expected next year.
But CBI director general Digby Jones says the CBI will oppose compulsion and has called on the state to provide a higher state pension and greater consumer education.
Speaking at the conference, Jones said companies have been unfairly demonised in the coverage of the pension crisis as employer pension contributions have risen from £17bn in 1997 to £37bn in 2003.
He said: “Compulsion would be expensive and would be seen by consumers as a tax which they will try to avoid.”
Jones said employer contributions at the 10 per cent rate called for by the TUC would cost businesses £22bn a year, hitting UK global competitiveness, particularly for smaller companies.
Raising the retirement age to 70 was dismissed by Johnson, who said two-thirds of men retire by 62, so the real challenge is getting people to work until 65.
Johnson defended means' testing, saying that 1.8 million pensioners would be worse off without it. He says the £5.4bn spent on pension credit has lifted 1.8 million pensioners out of poverty. Last week, pensions minister Malcolm Wicks said pension credit was not a long-term solution.