Ahead of the Pensions Commission’s report due out on Wednesday, the British Chambers of Commerce (BCC) is stepping up its campaign to ensure that employers will not be forced to pay into pension schemes.

Figures released today from the BCC show that employers who do not already contribute to a pension scheme – those firms targeted by the so-called ‘Britsaver’ scheme – could see staff cuts, pay freezes or increased costs for customers.

A BCC survey of over 800 businesses found that one-quarter of those firms that do not currently provide a pension contribution would be forced to lay-off staff if required to make a pension payment on behalf of all employees. Over a third of businesses would have to freeze salary increases, while one in three would be forced to pass the cost onto customers.

While the BCC acknowledges that the 'Britsaver' scheme would not necessarily mean employers would be forced to pay into a pension scheme for all employees, firms would inevitably would see their labour costs increase as a result of the scheme. Our survey found that 74% of firms that employ less than 50 people and that do not currently offer a pension contribution say the reason for this is that they cannot afford the cost.

Speaking in advance of the Pension Commission report, David Frost, the BCC’s Director General, said: “Businesses are seriously worried about what tomorrow’s report will recommend. The Britsaver scheme that has been hinted at recently would effectively be compulsion by the back door. Many firms, particularly smaller ones, tell us that they simply cannot afford to contribute towards a pension for their employees and forcing them to do so will clearly have damaging repercussions.

“While we are not opposed to the concept of a Britsaver scheme in principle, we do not believe that employers should be forced to pay into it. Such a move would prove counter-productive for employees and the UK economy as a whole, as businesses could be forced to lay-off staff and freeze salary increases. British businesses cannot afford for the Government to foist this scheme upon them.

“At a time when our companies are facing fierce competition from countries such as India and China, any form of compulsory pension contributions is the last thing that UK employers need.”

The British Chambers of Commerce took business concerns direct to Chancellor Gordon Brown today and Chambers of Commerce across the country have begun writing directly to the Minister for Pensions Reform.