UK employers group the Confederation of British Industry (CBI) has expressed concern that the Pensions Regulator has laid down too severe a framework to ensure pensions are sufficiently well funded.

The CBI has ‘major concerns’ about the required levels of defined benefit pension schemes laid down by the regulator, and the group fears that companies will be forced to switch millions of pounds from operational investment to plugging pensions gaps in the years ahead.

The Pensions Regulator has said that if companies cannot stabilize their pension funds with ten years, it may be forced to compel them to do so – something the CBI fears could leave 20% of British businesses in severe financial trouble. The regulator has denied that it is planning such constraints on pension funding.

If the regulator gets this wrong, it could have the perverse effect of throttling private sector investment, thereby damaging the UK economy, putting the very pension schemes the regulator is trying to protect under even more pressure, John Cridland, the CBI deputy director general, said in a statement.