10th December 2013
Seven out of ten businesses say the cost of running a defined benefits (DB) pension scheme is stifling their investment intentions, according to a new survey by the Confederation of British Industry (CBI) and Standard Life.
The survey of 226 chief executives and Board members in companies with £362.2 billion of pension assets under management revealed that almost eight out of ten manufacturers are also being affected by DB costs.
The survey also showed:
- 70 per cent of respondents reported that DB costs were impacting on business investment
- 46 per cent of respondents reported that DB schemes were restricting their ability to borrow
- 88 per cent of businesses are concerned about their about the prospects of contributions going up in the future
- 40 per cent of small and medium-sized businesses believe getting auto-enrolment right must be the top priority for the government ahead of the 2015 election.
The CBI's director of employment and skills, Neil Carberry, said:
"CEOs are looking for the Government to prioritise the big ticket reforms, making auto-enrolment easy and delivering the new State Pension effectively, while keeping DC simple and affordable.
"The cost of DB schemes is having a serious adverse impact on business investment, which must be the cornerstone of our economic recovery if we are to achieve sustainable growth.
"The Pensions Regulator's new objective to minimise the adverse impact of scheme funding has yet to have a positive impact. The Regulator needs to raise its game and ensure a material change in its day-to-day dealings with employers and trustees flows from its new legal duty."