The Confederation of British Industry (CBI) has urged the government to “rethink” company pension proposals to ensure that UK firms are not landed with a huge burden and seen as the “villains of the pension piece.”

The CBI is unhappy over government plans to protect the pension schemes of workers if their company becomes insolvent.

Under the proposals, employers would fund an insurance scheme which would continue to pay out pension contributions even if their company goes to the wall.

However, at a CBI conference on pensions held on Friday, speakers criticised the government for heaping further costs onto businesses and called for the insurance scheme to be paid for using public money and by charging workers with pension plans.

Richard Greenhalgh, chairman of the CBI’s pension strategy group, agreed that employees should have protection from company insolvency, but that the plans would lead to employers being branded “ villains of the pensions piece.”

“Employers cannot take on an even greater role in pensions without the government providing effective support.

“We are concerned the plans will not deliver increased security at acceptable cost. The entire burden is placed on employers while the government refuses to share any risk.

“Moreover, scheme members, as the ultimate beneficiaries, should at least share some of the cost,” he said.

The CBI said that pension insurance would cost firms an extra £375 million a year, and pointed out that a similar scheme in the USA lead to a funding deficit of £8.8 billion.

The employers body called for any future charge to be capped, increases not to exceed inflation and for a business representative to sit on any consultation board on the proposals.

However, the Trades Union Congress (TUC) hit out at the CBI’s comments on the pension fund proposals.

Brendan Barber, general secretary of the TUC, accused the CBI of “crying crocodile tears”.

“Let’s not forget is was employers who took pension holidays, and didn’t pay in when times were good, and employers who’ve been retreating from their pensions obligations, closing decent schemes, reducing their contributions, shifting the burden to their employees and leaving many workers high and dry.

"It is quite wrong for employers to demand that workers bear all the risk for the poor management of pension funds,” he said.

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