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Pensions reactions from business

Date 17 Sep 2006
Author The Editor

Yesterday’s pensions White Paper has been met with cautious optimism by business leaders.  The North East Chamber of Commerce (NECC) welcomed moves to link pensions to earnings, but is concerned about the added pressure on both employers and employees. Andrew Sugden, NECC policy director, said: “Under these proposals, employers face three options – absorb the costs themselves, pass them on to their customers or pass the cost back to employees through their wage packets. “It’s unlikely that companies can absorb the costs, and equally unlikely that they will shift the burden to customers, so their employees are likely to see their salaries pegged back to pay for the extra pensions contributions.” The Confederation of British Industry (CBI) added that SME’s in particular could face difficulties. CBI Director-General Sir Digby Jones said: “There will be anxiety amongst the business community that the Government is forging ahead with compulsory employer pension contributions despite the potential damage it could inflict on firms, particularly smaller ones. “Compulsion will cost employers £2.3bn and they will need help in managing this burden. At the very least the Government must commit to a package of financial support for small firms to help them adjust and absorb the additional costs.”

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