Bradford Chamber of Commerce has made a direct appeal to Work and Pensions Secretary David Blunkett to tackle the pensions "crisis" by simplifying the system for private pensions.

In a letter to Mr Blunkett the chamber has urged him to offer more incentives for individuals and suggested a raft of measures to ease the problem.

Earlier this year the chamber played a pivotal role in a national survey of chamber members to assess business views on the crisis and how it should be eased. It concluded there was "much work to be done" to persuade staff to make contributions.

The letter has also been sent to Bradford MPs.

Chamber president Richard Wightman said: "The evidence shows that, even where firms offer a significant pensions contribution, take-up is still modest. Companies, especially smaller ones, are also reluctant now to start a scheme if the leg-work in setting up and administering it is not matched by substantial interest from staff.

"We know that there are difficult decisions to be made, and we want to make sure that the Government is aware of the consequences of the wrong ones."

The earlier survey made the disturbing revelation that a quarter of businesses questioned said they may need to lay off staff if they were forced to set up a pension scheme and pay compulsory staff contributions.

The figure dropped to one in five for companies already operating a scheme but who were forced to pay compulsory contributions.

The survey also found that 36 per cent of firms would meet contribution costs out of existing profits or company expenditure and 31 per cent would pass those costs on to customers. The chamber has suggested to Mr Blunkett that financial incentives should be introduced for businesses to help set up schemes. It also proposed simplifying the available options and improving information to raise awareness and make pensions more appealing. Another chamber idea was to create a regime in which staff had to actively opt out of a scheme otherwise they would be included in it.

The chamber believes it is not clear whether compulsory contributions from employers or staff would remove the problem. And it is warning that compulsory payments could damage job creation and the UK's economic competitiveness.

The Pensions Commission is currently considering some of the suggestions made by the chamber and is due to report to Mr Blunkett next month.