The Confederation of British Industry (CBI) says 20% of UK companies could run out of cash and collapse, unless the Government allows more flexibility on when they pay into their pension funds.

The pension regulator introduced rules on funding defined benefit (or final salry) company pension schemes in December last year to replace the old minimum funding requirement, which was seen as too restrictive.

The new system is supposed to allow the trustees of and employees to agree funding arrangements that match the needs of individual schemes.

But the Government has set a 10-year limit on companies to meet funding requirements.

The CBI argues that this could prevent some of them investing when they need to and it wants the limit extended to 15 years.