The considerable burden on UK companies to fulfill their financial obligations to final salary pension schemes is harming future develop of Britain's business sector, the Confederation of British Industry has reportedly suggested.
According to a report in The Independent newspaper, a CBI survey has found that two-fifths of UK companies with final salary pension schemes have had to divert so much capital into their occupational schemes over the past two years that they have been left with no choice but to reduce business investment.
Even more concerning, one in five UK companies has had to cut jobs to pay for final salary contributions, the CBI argues. The survey from the business advocate group also indicates that half of all companies have been forced to make lump sum payments to pension pots to keep up with final salary scheme requirements.
Not surprisingly, around three-quarters of companies surveyed said that profits have been seriously cut by increasing pension responsibilities.
In the face of such unpleasant statistics, British firms are moving in their droves to close final salary programs to new employees. Staggeringly, according to the CBI’s figures, 60% of companies have final salary schemes available to existing staff, but only 16% are allowing new employees onto such pension programs.
While also pointing to the burden of high taxes, the CBI has called on the UK government to reduce regulatory red tape in order to reduce administration costs.