Employers urge pension insurance rethink

US scheme is nearly £9bn in the red

The government has been urged to rethink its plans to protect the pensions of UK workers.

The government had proposed that an insurance scheme - funded by employers - should pay the pensions of workers when their employees go bust.

But the employers' organisation, the CBI, argues that the government must guarantee the finances of the new fund; and that pension scheme members should pay the cost of the contributions to it.

The CBI has already warned that the scheme may prove inadequate and is set to go on the offensive again at a pensions conference on Friday.

The CBI has pointed out that the US version of the Pension Protection System, which the government is planning to copy, is nearly £9bn in the red because there have been so many claims.

Effective support

The government outlined proposals for a Pensions Protection Plan last December in its UK Pensions Green Paper.

Employers cannot take on an even greater role in pensions without the government providing effective support Richard Greenhalgh, chairman of Unilever

Under the proposal employers contributing to a pension scheme would have to take out insurance to cover the pensions of scheme members in case of insolvency.

At the time the CBI condemned the plan as an unwelcome burden to business.

Richard Greenhalgh, chairman of Unilever UK, will also call for the government not to increase the pensions burden on employers.

"Employers cannot take on an even greater role in pensions without the government providing effective support," Mr Greenhalgh will tell delegates.

Andrew Smith, Work and Pensions Secretary will be addressing the conference.