'Breathing space needed' on small firm pension schemes

Date: 26th May 2009

Small businesses are in need of urgent help if they are not to be damaged further by defined benefit final salary pension schemes.

That is according to the Confederation of British Industry (CBI), which has called on the Pensions Regulator to investigate instances where deficit repayments will take more than 15 years.

The group claims that this would allow smaller companies, such as sole traders and partnerships, to concentrate cashflow on keeping jobs and investment.

Deputy director general of the CBI, John Cridland, said: "Even when the economy was strong, longer lives and the loss of key tax incentives had made final salary pensions very expensive.


"Firms who are fighting to preserve final salary pensions find themselves punished by regulation and much worse off than firms who offer no pension at all."

Meanwhile, the Association of British Insurers has warned that cutting taxation relief for the UK's top earners could have a damaging affect on retirement savings levels.