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‘Delay pension auto-enrolment’ say IoD

The government should postpone the introduction of auto-enrolment of pensions until 2014, according to the Institute of Directors (IoD).

Under the current plans, employers will be required to enrol staff from October 2012, but the IoD believes that this could reduce spending power at a time when it is most needed to boost the economy.

Simon Walker, director general of the IoD commented: “ This is the wrong time to be implementing auto-enrolment, especially as The Bank of England’s downward revision last week of their growth forecasts for this year and next shows that companies and households are hard-pressed.

“Real incomes are being squeezed and employers are struggling to offer staff pay rises.”

Alongside the resulting dip in consumer spend, the IoD also believe that it will detrimentally affect employers who are already struggling to offer staff pay increases.

One third of IoD members have admitted that they will be forced to freeze salaries when contributions become compulsory; cancelling out the possibility of future pay rises.

There is also an ‘opt-out’, clause for employees, and the IoD also believes householders will prioritise income over future retirement funds.

Levels of employees choosing not to contribute to their pension are expected to be high, and while this will render the project a failure, it will also leave employers with vast amounts of paperwork

Mr Walker is now calling on the government to reconsider the proposals, especially as fewer than a fifth of IoD members are fully aware of the legislation.

“It is not too late for a change course – if the government defers auto-enrolment at next week’s Autumn Statement, it will have done so before most businesses have even considered the impact of the new rules,” he continued.

“The IoD proposes that the Government delay the introduction of auto-enrolment by two years, as this would give businesses time to strengthen their balance sheets while not undermining consumer spending when it’s at its weakest.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .