UK business fears over Europe’s plans for pension funding

TWO thirds of business leaders are concerned about the prospect of the EU enforcing plans to increase pension funding requirements for firms operating a defined benefit pension scheme, according to a survey conducted by the Confederation of British Industry (CBI) and Towers Watson.

The survey, which covered firms employing a total of 1.3m people, showed that business leaders are worried about new rules being planned in Brussels that would require high deficit payments over a shorter period of time.

CBI claims this could – at worst – cost employers with defined benefit liabilities hundreds of billions of pounds, and is urging the EU to reconsider its proposal.

Many firms are already under financial pressure and the cost and uncertainty of managing final salary pension schemes is said to be holding back businesses’ activities and harming their ability to grow.

The poll found that 69 per cent of businesses say providing defined benefit pensions is having a significant effect on their accounts already and 45 per cent say that they have less left to invest in growing the business – up from 38 per cent two years ago.