Mandatory pension scheme contributions should be scrapped immediately amid continued stock market decline, according to Tax Research UK director, Richard Murphy.

Global indexes have behaved erratically as the coronavirus crisis has deepened, with London’s FTSE 100 down by almost 5 per cent shortly after opening on Monday.

Murphy argued that the “immediate and obvious” thing for the government to do was to “protect the cash flow of companies and workers by immediately stopping the enforced payment of contributions into mandatory pension funds”.

The Pensions Regulator recently said that is expects employers to continue to pay pension contributions during the pandemic.

Along with the cancellation of pension contributions, Murphy also called for a “fundamental review” into the pension system as he claimed the coronavirus pandemic had exposed “fundamental weaknesses”.

He said he stood by previous work, during which he had set out a ‘fundamental pension contract’.

This stated that after an older generation creates capital assets and infrastructure through investment, a younger generation will benefit from these assets but meet the income needs of the older age group once they reach retirement.

“I believe that it is this contract which our future provision for pensions must respect,” said Murphy.

“In other words, saving in the secondhand shares of companies, which provides no direct benefit to those companies, and which delivers no investment of any real sort at all, and which does not create a single job as a consequence, is a wholly futile exercise at the macroeconomic level, at which this issue has to be considered if the well-being of society as a whole is to be our priority, which it should be.”

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