Following a Government report in 2004 highlighting a gap in the amount people were saving for their retirement, it emerged that 11.3 million workers are not making pension contributions.

If neither taxes, savings nor retirement ages are increased, future pensioners will suffer up to a 30 per cent decline in relative incomes in the future.

The root of the problem is that we are living longer. An aging population means that there are not enough taxpayers of working age to pay pensions for everyone. Also, businesses can no longer afford the lucrative final salary schemes and cannot continue to pay as much into their employees' retirement funds.

In July 2005, the Chamber of Commerce surveyed members in the two counties to gain local businesses views on the pension issue. They believe compulsory saving is not the answer, as one in five respondents said that if contributions were made compulsory for every employee it would mean that they would have to cut jobs. More than 50 per cent said that they would have to cut or freeze salaries in order to make extra payments.

This was particularly the case for small employers, which in the two counties are in the majority with approximately 90 per cent of businesses employing 1 to 10 people. Businesses and individuals need a simple system to be able to understand the income they will need in retirement and how much they will need to save to achieve that.

The Chamber is lobbying effectively with a meeting due to take place today with the Sir Malcolm Rifkind MP, Shadow Minister for Work and Pensions. The breakfast meeting, at The Courtyard, in Hereford, is to get local businesses views heard. The Chamber will also use its regular meetings with local MPs from all political parties to present the business case.

The Chamber recognises that changes need to be made and a solution needs to be found.

One such way is to volunteer people into employer contribution schemes instead of out, as the system is currently.

And for those businesses where the costs are prohibitive, the Chamber could act to support multi-employers schemes, therefore reducing costs to small businesses by sharing the administration cost. The public sector pension scheme also needs to change, as business and the taxpayer cannot continue to support this scheme unless significant changes are made.

For further information contact Gary Woodman, Policy and Lobbying Officer, on 0845 641 1501. or email g.woodman@chambercs.co.uk