Employers hit out at proposed pension reforms
12 June 2003
The government's announcement yesterday that it is planning to implement a compulsory insurance scheme for occupational pension funds has not been welcomed in all quarters.
Employer groups claim that the reforms, meant to protect workers' pensions from funds folding or going under, could bankrupt some firms, as they would add a considerable extra cost burden.
However, unions have welcomed the government action claiming it is long overdue.
The government was forced to take action after the high profile closure of many large pension funds left thousands of workers with little to show for years of saving.
The new rules government winding up pension funds mean that solvent firms who opt to close a scheme will have to honour their responsibilities and purchase annuities for retired members.
They will also have to provide scheme members who have not yet reached retirement age a sum that they can then invest elsewhere.
Stephen Alanbritis, spokesman for the Federation of Small Businesses, told BBC News Online that the new proposals could 'sound the death knell' for some businesses.
He claimed that sometimes winding up a pension scheme is the only way to keep a firm afloat.
The plans to force employers to insure their pension schemes, in the event of bankruptcy, has also been criticised for setting excessively high compensation levels for workers.
However, trade unions insist that the rights of workers to have their savings protected by legislation have been long overdue. The reforms are unlikely to help those who lost thousands in recent years when their company pension schemes were wound up.