PRESS DIGEST - Financial Times - Feb 15

Financial Times

PENSION FUNDS FACE A SHORTFALL OF BILLIONS

The Pensions Regulator is to unveil plans next week to force companies to use more realistic projections of how long workers will live after they retire, thus forcing them to add billions of pounds to their pensions liabilities. The standard to be proposed is tougher than that used by 99.5 per cent of UK schemes and will increase liabilities for companies from six to eight per cent. Roughly a third of all schemes could see disclosed liabilities increase by as much as 15 to 20 per cent. The regulator is concerned that companies are ignoring scientific evidence showing longer lives at older ages and that employers and insurers are not putting away enough cash to pay pensions in full.

BUSINESS URGES SECOND LOOK AT COUNCIL LEVY

Business leaders are calling on the government to rethink the supplementary business rate tax councils will be able to levy on businesses. The British Chambers of Commerce and the Institute of Directors say the tax will be the latest in a series of burdens imposed on companies which include a new capital gains tax and a levy on 'non-doms'. The director-general of the IoD, Miles Templeton, said the supplementary business rate would 'rock' business because it would be imposed on companies regardless of their profitability. The levy is to be used for specific infrastructure projects upon which local business people would in some circumstances have a vote.

SHIPPING TAX BREAK VITAL TO INDUSTRY, SAYS REPORT

A report from Oxford Economics and commissioned by the Chamber of Shipping suggests Britain's shipping industry contributes around 5.2 billion pounds to GDP and is far bigger than it would have been without significant tax breaks. The study shows the generous tax regime may have halted the industry's decline with UK-operated shipping now three to five times the size it would otherwise have been. The report is an attempt to quantify the impact on the economy of the large concentration of shipping businesses in London.

STUDY WARNS ON PUBLIC FINANCES

The consultancy firm Capital Economic warned on Thursday that Britain's public finances could deteriorate to a 'pretty catastrophic' position if the economy moves into recession next year. Capital Economics has joined the Institute of Fiscal Studies, the National Institute of Economic and Social Research and PwC in worrying about the UK's financial health. The analysis found that even if the economy performed as strongly as the Treasury expected, tax revenues would fall short of government forecasts. If the economy slowed more than this, the study found that public borrowing would rise to 'around 50 billion pounds per annum and stay there throughout the forecast period' up to 2012-13.