Pension changes could cost £350bn: CBI

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PROPOSED European Commission pension changes would be a “disaster” for British business, forcing billions of pounds of extra costs and leading to thousands of job losses, a new report has claimed.

The Confederation of British Industry (CBI) said long-term growth would also be cut by a potential 2.5 per cent if the plans to require pension schemes run by individual employers to operate like insurance firms go through.

A study for the business group by economic consultants Oxford Economics claimed that extra costs could total £350bn and 180,000 jobs could be lost.

CBI chief policy director Katja Hall said: “Imposing £350bn more costs on business would be a disaster for the economy and for pension saving.

“The long-term economic outlook is so fragile and uncertain that it is crazy to entertain proposals which would cost jobs and cut so deeply into our long-term growth and competitiveness.

“Workplace pensions are vital to ensuring people have enough money for their retirement when life expectancy is rising - so future generations are not hit with huge bills or driven into poverty.

“The European Commission’s wrong-headed proposal will do nothing to help us cope with the burden of retirement.

“We have a tough regulatory system in this country, so these changes are completely unnecessary.

“It’s alarming the Commission is still turning a deaf ear to calls from businesses, trade unions and pension funds to bin these proposals.

“The European Commission must leave individual EU members to deal with their own retirement saving systems, as they do at the moment, rather than imposing a new system from the centre.”

Pensions Minister Steve Webb said: “Last month I published figures that show the hugely damaging impact Solvency II could have on UK pensions, their sponsoring employers and the wider economy.

“That is why I continue to meet senior Commission officials, to persuade them to rethink their reckless plans.”