UK - The black hole in company pension schemes will hit government spending plans as corporation tax revenues plunge by up to £2bn, bosses warn.
The Confederation of British Industry claims firms will have to make additional pension payments of up to £8bn this year and rising to £16bn in 2005 to plug pension deficits.
The CBI estimates the total pensions deficit in the UK at £160bn. The CBI says as these contributions are tax-free they will lead to a decrease in corporation tax of between £1bn and £2bn.
Tory Treasury spokesman Michael Howard agreed. “Firms are having to increase their contributions to make up the gap, which will damage corporate investment and leave a hole in public finances.”
But Deloitte & Touche chief investment officer and head of investment services, Tony Osbourne Barker, said the government would make up any revenue shortfall in other ways.
“If pension funds are putting money into funds, by buying more gilts, then it will go back to the government.
“In theory, if everyone invested the money in bonds, the government would get its money sooner than waiting for it through taxation.”
Society of Pension Consultants president Donald Duval agreed. “The government will get it back, because the tax relief it gives on contributions it gets back through other taxes and reduced outlay on means-tested benefits.”
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.
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