The Institute of Directors has called on the Government to postpone the phased introduction of auto-enrolment pensions until 2014.
The IoD says real incomes are being eroded by inflation and the last thing the nation needs is to cut consumer spending further by making all workers earning more than the income tax personal allowance contribute to a pension.
The organisation warns that if companies are forced to pay employers’ contributions, many will be forced to freeze pay.
Meanwhile, the IoD argues, many employees are likely to opt out, resulting in the Government failing to reach its objectives while increasing the administrative burden on employers.
IoD director general Simon Walker said: “This is the wrong time to be implementing pension auto-enrolment.
“It is not too late for a change of course – if the Government defers auto-enrolment, it will have done so before most businesses have even considered the impact of the new rules.”