Pensions burden prevents firms from restructuring for recovery
DEFICIT payments on final salary pensions have damaged restructuring and recovery plans for more than a third of firms, double the number compared to 2007, says a survey released today by the CBI and Watson Wyatt.
Three quarters of the 192 companies questioned, representing over one million employees, say they will have to pay more into their next funding plan.
CBI deputy director-general John Cridland hit out against the Pensions Regulator saying 10-year trigger plans and “current regulation of final salary schemes is obstructing business reorganisation, often without making those pensions any safer”.
John Ball, head of defined benefit pensions consulting at Watson Wyatt said: “Three-quarters of employers think they will have to pay higher contributions immediately but that’s not the end of the story. Trustees and the Regulator will want deficits cleared more quickly if profits return, so this increase in contributions may not be the last.”
A spokeswoman for the Pensions Regulator stood by chair David Norgrove’s comments in June. He said: “I disagree that in the biggest economic crisis I’ve seen in my lifetime it would be responsible to move the trigger for scrutiny of recovery plans.”