CBI responds to pensions reform

The Confederation of British Industry (CBI) has backed proposed reforms to move pensions to a single tier system.

And it has welcomed proposals to protect private sector employers from the increases in National Insurance Contributions from the abolition of contracting out final salary schemes from the State Second Pension.

Neil Carberry, CBI director of employment and skills policy, said: “The current state pension is confusing and complex. Big rises in life expectancy and long-term pressure on public finances mean we must get more people saving for old age.

“These reforms will give real clarity and certainty about how much retirement income people will get from the state and how much they need to save privately through auto-enrolment schemes. It is right that the changes will protect state pension entitlements built up before the reforms kick in.

“Businesses have been concerned about the financial impact of abolishing the National Insurance rebate for contracting out defined benefit schemes. They will be pleased that the Government has put a plan in place to deal with this. The rebate is in place to recoup the National Insurance owed to employers by the state for paying the Second State Pension on its behalf.  The changes will only be acceptable if employers with defined benefit schemes are not left worse off.”