The European Commission's plans to update its rules on retirement funds would add £150bn to the liabilities of UK pension schemes, according to estimates just published by the Department of Work and Pensions, and could cost £400bn, in a move the UK government minister responsible for pensions described as "devastating".

Steve Webb, the pensions minister, told the European Retirement Federation in Frankfurt yesterday that the figures, calculated for the government by the Pensions Regulator, showed the scale of the problem. He said the likely outcome would be a cost to UK employers with final salary schemes of around £150bn. In a worst case scenario, pension shortfalls could rise by as much as £400bn.