Two of the most powerful lobby groups for business and the City have called on the Pensions Regulator to abandon a controversial proposal on mortality assumptions that they claim could force a rash of final-salary pension schemes to close.

The CBI and the National Association of Pension Funds (NAPF) condemned as unacceptable the regulator’s plans to make scheme trustees use more conservative assumptions about the life expectancy of members after they retire. They said that the guidelines would impose an unnecessary financial burden on schemes, which would be forced to increase contributions despite being well-run and well-funded.

Neil Carberry, head of pensions policy for the CBI, said: “This is too far, far too fast. It is too much of a Big Bang approach.”

The Pensions Regulator proposed the guidelines in February. It suggested that trustees should presume that members will live longer than the most conservative projection. Critics said that, although the move was designed to target a select group of badly managed funds, the regulator was inadvertently imposing a rule that would hit 90 per cent of final-salary, or defined-benefit, schemes.

During the past five years companies have been closing final-salary pension schemes to new joiners. The risk of retired employees living a long time and a three-year buffeting in the stock market have made many schemes more expensive to run. The latest NAPF survey indicated that only 31 FTSE 100 companies were operating open final-salary schemes.

Nigel Peaple, of the NAPF, said: “We would like the regulator to abandon its proposal that all underfunded schemes must assume that mortality will improve at the highest amount or otherwise face being subjected to additional scrutiny. The unintended consequence will be to pressure all schemes to adopt a very conservative mortality assumption that will add to costs unnecessarily.”

The regulator said that it would take the concerns on board.

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