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Businesses need to be given more help with managing their pension schemes, the Confederation of British Industry (CBI) claims.

According to the employers' group, short-term measures can be used to prevent struggling companies from being damaged by contributing to defined benefit final salary pensions.

The CBI calls for firms to be given 'breathing space' in making up deficits in final salary pension pots, which promise workers a set retirement income, by extending the repayment time from ten years to 15.

One effect of allowing firms to make up their deficit over a longer period will be the freeing up of cash flow to use for investment and protecting jobs in the recession, the organisation claims.

John Cridland, CBI deputy director general, says final salary pension schemes are expensive even in healthy economic conditions, due to factors such as loss of tax incentives and increasing life expectancies of claimants.

He adds: 'Businesses are badly winded by the recession and, when it comes to their long-term pensions issues, they need a bit more time to catch their breath.'

A recent report by pension fund advisers Aon Consulting claimed that weaknesses in the UK's pension system are placing firms at a competitive disadvantage to their European counterparts.

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