UK/EUROPE - The pensions crisis will worsen if Britain joins the euro, the Institute of Directors warns.
It says monetary union would mean Britain would have to help tackle the generous state pension promises in Germany, France and Italy.
Chairman Nicholas Cook said: “British membership of the euro would have enormous political and economic implications for business due to the fiscal convergence required. I am pro EU, but this would be a serious risk to our economic stability.”
Hammond Suddards Edge partner and head of international practice Jane Marshall agreed.
“Their debt would have to be – in part – picked up by the British taxpayer.
“You have to look at the liabilities of each member state. In those countries that have generous state pension arrangements it is unlikely in the long run for them to be able to cope with the added liability of aspects such as longevity.”
She added that the government would have a hard time explaining why the taxpayer is having to finance other countries’ pensions promise.
* Companies will face huge additional pension costs if a draft European Union directive comes into force, a leading consultant warns.
Under the proposals, schemes would need to have “sufficient and appropriate assets” to protect the interests of scheme members and pensioners if the sponsoring firm goes under.
Gissings director – actuarial consultancy Paul Clark said: “This will turn pensions into a benefit promise, as opposed to a funding promise which we have at the moment.
“That will increase costs very substantially, it would certainly make the FRS17 figures look a bit silly and probably too low.”
However, Clark expressed relief that the directive will not cover small schemes, those with fewer than 100 members.
The EU believes that excluding small schemes from the directive will not affect its goal of creating a single pensions market and will, in fact, facilitate the supervision of schemes by member states.
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.