The Pensions Bill 2007, which reached its second reading in Parliament last week, could hit the baking industry hard if it becomes law. That’s the view of pensions consultancy Aon, which said the Bill will cost UK companies an extra £4bn, if it is passed.

Chris Dale, head of Aon’s food and drink practice, said: "The Pensions Bill could hit the tight margins of the food and drink sector, which will have to provide pensions to a high number of part-time staff. This could see deficits soar at a time when food prices are inflating at their fastest level for 14 years, driven by increasing fuel and raw material costs. Manufacturers will be forced to pass on increased costs to consumers via retailers. This will further exacerbate the spiralling food and drink price inflation."

The Pensions Bill 2007 proposes an automatic enrolment in a workplace scheme or personal accounts for all workers, aged between 22 and state pension age earning more £5,035 a year (at 2006/07 rates). Workers would contribute a minimum 4% of their salaries, employers a minimum of 3% with around 1% in tax relief from the government.

"Reacting to the perception that the voluntary pension system is irreparably damaged, the government is now resorting to the enforcement of compulsory employer contributions," said Dale.