The survey by the Confederation of British Industry (CBI) and Towers Watson found that the cost and uncertainty of managing defined benefit (DB) schemes were holding back business activity and harming their ability to grow. Company managers in the UK remained concerned about the level of funding within DB pension schemes, with 85 per cent of businesses concerned that market fluctuations could further harm funding levels.
Katja Hall, the CBI's chief policy director, said: "Large and unpredictable liabilities are also harming firms' ability both to attract investment to grow the business, or to restructure to cope with difficult times. "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."
Hall said that Solvency II regulations would cause a "massive" flight from equities, with funds forced to focus on fixed income over investment in the stock market.
The report also suggested that the Pensions Regulator must show it understands the added costs and risks as firms negotiate new deficit recovery plans. However, the study also insisted that businesses in the UK remained satisfied with the Regulator’s interaction with their company – against 12 per cent who were unsatisfied – and argued that the positive balance of +32 per cent reflected the additional flexibility the Regulator gave firms to cope during the recession.
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