CBI calls for changes in UK pension system
The CBI has today spoken out in support of UK businesses and demanded that the UK authorities review the current pension arrangements. The institute believes that UK businesses are at a "severe competitive disadvantage" because of the various rules and regulations present in certain areas of UK pension industry. One of the main problems is the short-term reviews required under current regulations which mean significant short-term black holes need to be covered thereby impacting upon short-term cash flow.
The CBI confirmed that the UK has around £2 trillion of pension fund assets with three quarters relating to defined benefit schemes, which are struggling to meet their ongoing liabilities. As we have seen over the last few months, the UK stock market in particular and the UK property market have both been very volatile and created significant short-term funding shortfalls. However, the CBI argues that a longer term approach to pensions, as we saw before so-called A-Day, would suit UK businesses much better. However, in defence of the UK authorities there was a need to balance the protection of UK businesses and the pension arrangements of millions of UK workers.
While the real situation is probably somewhere between the government's understanding and that of the CBI, there are certainly changes needed in the short to medium term.
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