A business lobby group and trade unions have teamed up to criticise the UK Pensions Regulator (TPR) over its planned implementation of a new governing regime for defined benefit (DB) schemes.

In an open letter, the CBI and Trades Union Congress (TUC) confronted the current head of the regulator over what it calls a “too rigid approach”, which will drive pension scheme trustees towards excessive prudence.

TPR has just concluded a consultation on its new DB funding regime, which saw the inclusion of a new objective from the UK government.

The regulator must now incorporate the requirement to ensure that pension deficit recovery plans are balanced, and support the continued growth of the sponsor’s business.

However, the CBI and TUC said the regulator’s current approach to implementing its new objective was an opportunity missed.

The letter said the rationale for the new objective was not adequately reflected in TPR’s draft documentation on its new governing regime.

It added that its draft code of practice, which expresses behaviours the regulator would expect trustees to demonstrate, risks preventing the new objective’s implementation altogether.

“We are therefore calling for a shift in culture and approach,” it said.

“Far from minimising risk, the regulator’s approach may increase the chances that employee benefit rights cannot be met.

“Together, we are calling for less prescriptive instructions and greater flexibility to encourage cooperation between businesses and trustees.”

The letter was co-signed by Neil Carberry, director for employment at the CBI and his namesake, assistant general secretary Kay Carberry, at the TUC.

Neil Carberry said the objective was intended to ensure trustees and businesses fostered healthy companies and pension schemes.

“We are concerned this intent is not sufficiently reflected and the regulator is trying to force schemes to artificially reduce risks in a way that will divert necessary cash away from business investment,” he said.

Kay Carberry added: “The regulator needs to get the right balance between the health of the scheme, [and] the interests of the sponsor.”

The concerns expressed by the two organisations echo similar criticisms made by respondents to the regulator’s consultation.

The National Association of Pension Funds (NAPF) and Society of Pension Consultants (SPC) were two of many organisation arguing that the regulation in its current guise is too prescriptive, and may heavily pressurise trustees to act differently.

However, in response to these claims, and the letter sent to TPR’s chief executive Stephen Soper, the regulator said its principles were designed to improve dialogue between trustees and sponsors.

“It is our role to balance the needs of employers, members and the PPF,” Soper said. “TPR is grateful for all feedback to our consultation. The majority of concerns can be addressed.”