CBI critical of missed opportunity on pensions

The CBI has claimed the Pensions Bill, which received Parliamentary endorsement yesterday, is a wasted opportunity to restore employer confidence in pensions.

The CBI said the Government had sought to address the needs of scheme members, but had offered little to meet the equally legitimate needs of employers.

John Cridland, CBI deputy director general, said the Bill had become complex and confusing and may have the effect of encouraging firms to move away from final salary schemes.

The Bill contains provision for a £400m Pension Protection Fund (PPF), which is intended to provide better protection for the accrued rights of staff with defined benefit occupational pension schemes in organisations that become insolvent.

Cridland said the PPF had become unnecessarily burdensome and had no financial backing from the Government.

The CBI had called for the PPF levy to be shared between employers and pension scheme members. Employers would have the ability to pass on the non-risk-based amount of the levy to all scheme members where appropriate (active, deferreds and pensioners) under CBI proposals.

The CBI is also concerned that the Government will not act as guarantor of last resort. This could place an open-ended liability on many firms with defined-benefit schemes.

The Bill is set to become law in April next year.

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