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Daily Insurance Industry News
Thursday 22nd of February 2018
December 13, 2011

EU pension regulation a death knell to DB schemes

by Gill Montia

Story link: EU pension regulation a death knell to DB schemes

Proposed EU pension regulations would add to business costs at a time when pension deficits are already holding back company performance, the Confederation of British Industry (CBI) claims.

The latest CBI / Towers Watson Pensions Survey, which covers firms employing 1.3 million people, indicates that the costs and uncertainties of managing defined benefit (DB) schemes are holding back business activity.

Close to three-quarters of respondents were already worried about the level of funding of their DB schemes and firms fear that things will get worse, with two-thirds of business leaders questioned concerned about the prospect of the EU enforcing high-deficit payments under proposed Solvency II-style rules.

Nearly a third of companies said their DB scheme is already closed to future accrual by existing members, and the proportion is expected to rise to 43% in the next two years.

The research also suggests that two thirds of employers who currently offer DB benefits to at least some employees are either planning to close their scheme completely or make changes to it.

CBI chief policy director, Katja Hall, comments: “What’s completely unacceptable is Brussels’ plan to impose further costs on firms operating defined benefit pensions at a time like this, when the protection in place has already proven itself during the economic crisis.”

He adds: “We have told the EU, trade unions have told the EU, the pension funds have told the EU. So far they have refused to listen.”

 

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