Pensions 'need long-term view'
Mar 11 2009
Businesses should be able to take a long-term approach to pensions to avoid having to make large contributions, according to the Confederation of British Industry (CBI).
Figures from the Pension Protection Fund (PPF) reveal that the collective deficit of almost 7,800 final salary schemes reached a record £219 billion at the end of last month, an increase on the £191 billion recorded in January 2009 and £67 billion reported in February 2008.
The organisation also points out that 91 per cent of schemes in the PPF are showing a shortfall, with falling equity markets and bond yields causing the value of scheme assets to fall by almost five per cent.
Commenting on the findings, CBI director of employment Katja Hall recommends that the government and the Pensions Regulator permit companies to adopt a long-term approach to their schemes and make up the deficits over a greater period of time.
The CBI calls for the PPF to avoid increasing contributions to its funds to make up the shortfall, citing the fact that companies are already paying £700 million a year, up from the original estimate of £300 million.
Hall explains: 'If they do not do this, firms could be forced to make large contributions to their pension schemes when they can least afford them. This would not be in the interests of pension funds, companies, the economy or the government.'
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