CBI warns on excessive pensions regulation
LONDON (Reuters) - Excess regulation is increasing the risk of final-salary pension schemes being closed or bought out, the Confederation of British Industry said on Wednesday, joining growing criticism of new rules facing the industry.
In a speech to business leaders on Wednesday, CBI Director-General Richard Lambert said an increasing number of firms had warned in recent months about the growing pressures that defined benefit DB.L schemes were facing.
His comments follow criticism of proposed new rules from groups such as the National Association of Pension Funds.
Earlier this month the Pensions Regulator delayed proposals to make pension schemes use more conservative mortality assumptions after criticism it created unnecessary pressure.
"Pension deficits are back near the top of the corporate worry list. There is an incoming tide of complex and expensive new regulation that threatens to drive an extra nail into the coffin of many DB schemes," said Lambert.
In his speech he pointed to recent proposals from the Accounting Standards Board for companies with a defined-benefit scheme to carry the worst-case funding scenario on its balance sheet, the Pensions Regulator's proposals on mortality assumptions and a higher-than-expected levy from pension lifeboat the Pension Protection Fund PPF.L.
Instead he proposed cutting back poorly justified regulation, giving firms more stability on the PPF levy and other costs and giving employers more freedom in the schemes they offer.
His comments come at a time when many blue-chip UK firms are already seeing their final salary pension liabilities swell rapidly due to falling long-term interest rates and rising inflation.
FTSE 100 firms' pension schemes lost a total of 30 billion pounds in the second quarter, slipping to a deficit of 9 billion pounds from a surplus of 21 billion the previous quarter, according to research by pension consultancy Redington Partners.
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