The Confederation of British Industry came out in favour of a revamped second state pension today to help low-paid workers to a more comfortable retirement.
The CBI believes that reform of the second state pension could increase the retirement income of someone earning £20,000 by as much as £2,000 a year.
It is to submit its argument to Adair Turner's Pensions Commission, which last year warned that 12 million people are not saving enough for their old age.
The Commission is due to release its final report later this year.
The CBI warns that lowerearning employees in smaller businesses without pension schemes are most at risk of an inadequate pension in old age.
It believes that a reformed second state pension would offer lower-cost saving options to this group, acting as a savings top-up linked to earnings, to supplement the basic state pension.
Such a scheme could be: n Run by the state but invested by existing privatesector experts n Based on a system of defined contributions linked to earnings n Aimed at those who do not have access to occupational pension provision
CBI deputy directorgeneral John Cridland said: "Private pensions have helped millions save successfully for their retirement and will do so in the future. This pensions market is a source of great strength.
"However, a serious gap in UK pension provision exists among lower earners and staff in some smaller firms.
" They are not saving enough and arguably are not earning enough to fully benefit from what the market currently offers."
