UK - Around 75% of companies with defined benefit schemes are suffering a significant or severe drop in profits due to spiralling pension costs, a survey by the Confederation of British Industry (CBI) and Mercer Human Resource Consulting has found.
And the survey of 355 CEOs, chairmen and senior board members found the problem was actually worsening - only 50% of firms reported the same problem two years ago.
The survey also found 40% of firms with DB pensions schemes had cut their investment in the business - either through people, new products or equipment - as a result of pension costs, and CBI deputy director-general, John Cridland suggested it would put their future competitiveness and viability at risk. At a time when business investment is being squeezed by higher business taxes and the sky high price of energy, the added burden of spiralling pension contributions is threatening UK firms' ability to invest in future jobs and growth,” said Cridland.
While he felt it was clear employers remained committed to pensions, Cridland said they would need government support going forward.
“The government must take heed of the extra burden on companies of these massive contributions and deliver on its promises in May's Pensions White Paper to simplify rules and reduce regulatory burdens.
The survey also highlighted how companies were looking to address the impact of high pension costs, with 60% planning to increase members' contributions to pensions in the next year.
A further 6% of firms have closed DB schemes to existing members, opting to open defined contribution schemes instead, while 16% more said they planned to do so in the next two years.
By Damian Clarkson
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