The country's looming pensions crisis could be forestalled by ending forced retirement on age grounds, according to business leaders.

In its response to the Pensions Commission Consultation on pension reform, over three-quarters of members of the Institute of Directors (IoD), said in a survey they opposed staff being compulsorily pensioned off when they reached a certain age.

In fact, most employers expect the average retirement age to increase over the next two decades, with only 20 per cent believing the current average retirement ages (64 for men and 61 for women) would stay the same.

IoD Essex branch chairman Nicholas Cook said: "We all know that demographic changes will radically affect our pensions position.

"Abolishing a compulsory retirement age could certainly help in easing the problem.

"From our research there seems to be a genuine belief among employers that many of their staff will want to work for longer than the current law allows.

"Ultimately, what we need most of all is flexibility in the system."

The IoD stressed that ending compulsory retirement was only one of a number of reforms necessary to ensure adequate pension provision in the future.

Of equal importance would be a radical simplification of the whole pensions system, enhanced employee and employer contributions and increased tax incentives for pensions funds.

Nicholas Cook added: "Employers are very keen to tackle the whole pensions crisis partly out of responsibility to their employees but also because they, as individuals, will be affected in the same way as their staff.

"Our research shows that two-thirds of directors are on the same pension scheme as their workforce."

The IoD is currently undertaking a wide-ranging consultation exercise with members on reform of the UK pension system.

Published Monday February 14, 2005

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