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CBI calls for action over pension costs

THE employers' organisation has called on the Government to prevent soaring pension costs harming businesses' ability to invest and create jobs.

The Confederation of British Industry (CBI) has urged action to address both artificially high deficit figures and a potentially significant hike in the cost of the Pension Protection Fund (PPF) to businesses.

Recent research from the consultants Towers Watson predicts that the PPF will raise the levy it charges schemes eligible for its protection, by about 25% on average.

At the same time, low yields from gilts – bonds issued by the Bank of England which are used in valuing the likely cost of future pensions – have pushed deficits up.

The CBI said this would be a potential double whammy for businesses running defined benefit pensions, who already contribute £36 billion a year to these schemes.

John Cridland, CBI Director-General, said: "We're urging the Government to act to address this issue by taking three steps: stop the rollercoaster deficits by smoothing the measure of the gilt yield for businesses; halt a possible 25% rise in PPF levies next March; and ensure the Pensions Regulator takes account of businesses' ability to grow."

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