Pensions group warns new EU rules may force schemes to shut

City A.M. Reporter
BRITISH companies may have to stop offering final-salary linked pensions because of the cost of applying proposed European rules, an industry lobby group said.

The proposed regime would force firms to find an extra £300bn to strengthen their pension pots, the National Association of Pension Funds (NAPF) said in a report out today, arguing this expense would threaten jobs and investment as employers look for alternative ways to fund their capital requirements.

The European Union’s proposed changes would require pension funds to make sure they have enough cash to cover the retirement incomes of its employees if a company went bust.

Final-salary linked pension schemes, which promise staff a pension based on their salaries, are already struggling to generate returns due to weak stock markets and low interest rates.