Businesses 'need urgent action' to help deal with pension deficits

Action must be taken now to ensure that businesses are not further hit by their defined benefit 'final salary' pension schemes, the Confederation of British Industry (CBI) has warned.

The CBI has put forward an eight-point action plan, in which it urges the Pensions Regulator to only investigate firms whose pension fund deficits will take more than 15 years to repay, rather than the current ten years, to allow businesses some breathing space.

The organisation argues that extending the timeframe would reduce the burden on businesses, allowing a greater share of cashflow to be dedicated to maintaining jobs and investment during the recession.

The CBI is also calling for a move away from spot market valuations, and towards longer-term fund valuations that more accurately reflect the underlying position of pension funds.

John Cridland, CBI Director-General, said, '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. We cannot rule out large scale closures of these schemes in the longer term, but these short-term measures will help'.