CBI Calls For More Tax Incentives To Mend UK Pension System

by Robert Lee, Tax-News.com, London

20 July 2004

The Confederation of British Industry has called upon the UK government to give both employers and workers tax breaks in a bid to encourage more to save for their retirement and help patch up the nation’s ailing pension system.

In a report published last week focusing on the development of sustainable pension provision, the CBI argued that the government should place more emphasis on helping small and medium-sized business by reducing the cost and regulatory burden, and considering an SME tax credit.

At the very least, the CBI observed, the government should maintain the current level of tax incentives in the pension system.

In common with many industrialised countries which have a progressively ageing population, money paid into the state pension system through tax contributions is unlikely to meet tomorrow’s pension costs.

The problem has been compounded by a troubled private pension industry which has suffered at the hands of poor stock market performance.

"Employers are not the villains of the piece. Private provision has been tested to the limit by falling returns on investments, tax regime changes and longer life expectancy,” stated Richard Greenhalgh, Chairman of bio-science firm Unilever UK and leader of the CBI’s Pensions Strategy Group.

Stressing the unsustainability of public sector schemes, the CBI warned that unless these are made more affordable, it will lead to growing resentment among private sector workers and employers who are paying the taxes that finance them.

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