The Confederation of British Industry says it supports the Pension Protection Fund proposed by the government but added that firms would be “dissatisfied” with government reassurances over the make up of the levy.
Richard Greenhalgh, Chairman of the CBI’s Pensions Strategy Group and Chairman of Unilever UK, warned that ministers could undermine the credibility of the fund by failing to take account of the risk of company insolvency until at least a year after the fund is introduced.
He said: “Business does not want to see employees left high and dry in retirement because a company has gone bust. That is why firms have strongly backed the idea of a fund.
“But companies do want to see serious momentum behind efforts to address their concerns, in particular that the fund should take into account the risk of company insolvency as well as underfunding. Otherwise we will be in the unacceptable position of well-managed funds with sufficient resources effectively underwriting other schemes.
“We appreciate efforts to reassure business on this point and we recognise these issues are difficult to resolve. But we are not convinced that there needs to be further delay. There is no reason why the government cannot make headway on specific proposals over coming months.
“Firms are unconvinced that elected ministers should pass this critical decision to an unelected board. The US experience demonstrates the importance of getting this right and the consequences of getting it wrong. Business remains keen to work with ministers to resolve these issues.”