CBI - pensions homepage

The CBI and Mercer have launched their joint report, Saving for tomorrow: the role of defined contribution schemes. With DC quickly emerging as the dominant type of pension provision in the UK, CBI and Mercer have developed a guide to showcase DC schemes demonstrating best practice. There are many high quality occupational DC schemes, but often they are undervalued. In this guide we address some of the challenges sponsors are facing.
Click here to purchase a copy of the guide.

CBI warns government over regulation powers

The CBI met with minister for Pensions Reform, Mike O'Brien MP and DWP Parliamentary Under Secretary in the Lords Lord McKenzie on June 26, to discuss the impact of the current Pensions Bill on existing provision. In particular, CBI raised the recent proposals for new powers for the Regulator to impose contribution notices on firms and individuals. At the meeting it was emphasised that while members supported the intention of the actions, the approach taken was too sweeping and that major changes would be required to gain business support. This message was also delivered at separate meetings with officials. The CBI has also previously raised with the Minister the issue of increasing costs in defined benefit schemes, including new proposals on accounting and longevity. We have emphasised the significant commitment that many firms are making to keep their schemes open for future accrual, and the dangers of further increasing the costs of this commitment.
Email neil.carberry@cbi.org.uk

CBI and DWP changes in Pensions Regulator powers

Responding to the government's consultation on extending the powers of the Pensions Regulator to require additional security where there is a risk of a scheme being left underfunded and without a sponsor, the CBI raised significant concerns. While supporting the need to take action to ensure that the system properly regulates non-insured pensions buyout firms, the government's approach needlessly increases costs for all firms and circumvents heightened parliamentary scrutiny by moving the relevant clauses into regulations. With db schemes already under pressure, such an imposition of new costs could be disastrous. In particular, we were worried by the retrospective application of the powers. On April 28, we secured a commitment from DWP saying that any retrospective application of the new powers will only apply to non-insured pensions buyouts.
Email neil.carberry@cbi.org.uk

PPF scaling factor predictability must be improved

CBI members met with Partha Dasgupta, Chief Executive of the PPF at the third event in the CBI/KPMG pensions breakfast series on 14 May. Partha spoke about the experience of the PPF so far and plans for the future. Members quizzed Partha on the steps that the PPF is taking to ensure that the insolvency scoring of firms is correct and pressed him on how PPF will ensure that the levy is fair to all firms. On May 30, the Pensions Protection Fund (PPF) announced the scaling factor, which is used to calculate individual firms' levy bills. Despite setting a guide figure of 1.6 in November, the final figure was 3.77, meaning firms will have to pay roughly double what was expected when levy Bills are sent. While many firms will be paying less than last year, the lack of any warning about the change in scaling factor was regrettable, and the CBI has raised the issue with PPF directly.
Email Susanna.Muhleder@cbi.org.uk

Pensions Bill moves to committee stage in Lords

The Pensions Bill - which introduces the national personal accounts scheme from 2012 - is now being scrutinised in House of Lords committee. We continue to lobby hard to ensure that employer compliance with the duties created by the Bill is not too burdensome, especially for those firms who will operate their own schemes. As a result, we are actively supporting amending the Bill to 'grandfather' existing schemes with contribution rates higher than 8% of all basic pay to avoid heavy costs from changing scheme rules being faced by firms. Without such an amendment the risk of so-called "levelling down" in provision will be increased.
Following concerted lobbying from the business community, it was confirmed by the EU that contract-based defined contribution schemes will be able to operate automatic opt-in from 2012 to comply with the new laws on pension saving from 2012. Schemes had faced very costly changes to design or employees' contracts, but CBI persuaded government to approach the EU about the issue and supported their approach by co-ordinating a joint letter from nine UK organisations.
Email jim.bligh@cbi.org.uk

CBI responds to regulator's mortality proposals

The CBI has sent a formal response to the Pensions Regulator's proposals for a conservative "trigger" on scheme longevity assumptions, which received wide press coverage. Imposing an overly prescriptive regime would undermine the Regulator's scheme-specific approach and needlessly raise costs for companies, weakening their ability to keep pension schemes open for future saving. Firms are already taking action to ensure employees' pensions are protected as life-spans improve and while it is clear that life expectancies are increasing, the persistence and scale of the trend is in no way as certain as the Regulator's proposals suggests. The CBI made clear that a more moderate approach was required than the Regulator plans, as there is little certainty about the scale of future increases. The CBI also opposed the proposed retrospective application of the trigger to 31 March 2007 as costly and damaging for companies currently undergoing valuation and contribution negotiations.
Email Susanna.Muhleder@cbi.org.uk

CBI launch good practice pensions guide

The CBI and Mercer has launched Saving for tomorrow: the role of defined contribution schemes. With DC quickly emerging as the dominant type of pension provision in the UK, CBI and Mercer have developed a guide to showcase DC schemes demonstrating best practice. There are many high quality occupational DC schemes, but often they are undervalued. In this guide we address some of the challenges sponsors are facing.
For more information or a copy of the report, please contact jim.bligh@cbi.org.uk

CBI members meet Accounting Standards Board

Members of the CBI Pensions Panel and the CBI Financial Reporting Panel have held joint discussions with the Accounting Standards Board (ASB) over their proposals for the development of how pensions liabilities are captured on the balance sheet. The ASB proposals could have the effect of increasing the balance sheet liability carried by companies by up to 50%. The CBI will be responding strongly against the ASB proposals.
Email Susanna.Muhleder@cbi.org.uk

Pensions debt regulations 'need to go further'

Reacting to the launch of amendments to employer debt regulations for pension schemes ('Section 75'), the CBI has called for much more sweeping change to allow companies to avoid this unnecessary and costly rule. Many firms face sizable Section 75 bills at present - up to £400m and more - by simply restructuring their core business to improve competitiveness. In most cases, these moves would increase the strength of the pension scheme but are held up by firms' inability to justify paying huge Section 75 demands. The government has bowed to CBI pressure for a full review of this statute this year, but action must be taken swiftly as many corporate restructurings are currently being held up.
Email neil.carberry@cbi.org.uk

Pensions news round-up

Action needed over firms' DC pension schemes