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Defined benefit pension schemes 'stifling' investment

Business investment is being "stifled" by the cost of running defined benefit (DB) pension schemes, according to a Confederation of British Industry (CBI) and Standard Life report.

The CBI said 70% of respondents to its research said the cost of their company's DB scheme was having an impact on their business investment.

Although 90% said they were worried about contribution costs rising, 64% of firms said they did not plan any changes to their final salary or DB schemes.

Neil Carberry director of employment and skills at the CBI said the cost of DB schemes was having a "serious" impact on business investment, which should be the "cornerstone" of the UK's economic recovery.

The research surveyed 226 chief executives of companies with combined assets under management of £362.2 billion.

Get auto-enrolment right

The study, A view from the top,also found a third of businesses believe getting auto-enrolment right must be the top priority for the Government in the lead up to the 2015 general election in 2015. More than 40% of SMEs said this is a top priority.

The CBI said businesses want the Government to get existing plans right, not "come up with new ones".

The study also highlighted businesses are worried about the threat of regulation increasing the cost of auto-enrolment compliance.

Carberry said CEOs want Government to "prioritise the big ticket reforms", by making auto-enrolment easier and delivering the new state pension effectively.

Paul Matthews, Standard Life CEO, UK and Europe, said: "Auto-enrolment is dramatically changing the pension savings landscape in the UK - it is a vital lynchpin in encouraging a long-term savings culture.

"However, it is not simply a one-off event, but an ongoing responsibility for employers to manage.

"We need to focus on longer term provision, rather than just the initial process of setting up the scheme and getting people in."