Pensions - Articles - ACA on deferral of defined ambition pension regulations

 The reforms were particularly favoured by former Pensions Minister, Steve Webb, and were designed to give employers and employees access to pension arrangements and products that would offer better and more stable pension outcomes than pure defined contribution schemes and plans. Some observers felt the ‘freedom and choice’ agenda, led by the Chancellor, has undermined the proposed DA regime, but the danger is that in deferring the regulations, employers have no new ‘middle way’ options between defined benefit schemes and defined contribution.

  

 Commenting on the announcement, ACA Chairman David Fairs, said:

 “With private sector defined benefit schemes mostly closed to new members and increasingly to future accrual by existing members, the deferral of DA to an unspecified date means the Government must now lay out convincing plans to really boost pension savings over the years ahead.

  

 “Only this week, we published survey results[2] pointing to millions of employees saving very little and setting out proposals to increase minimum pension contributions over the next decade or so to around 16% of earnings. With over 5 million at present – likely to increase to over 9 million by 2018 – excluded from being automatically enrolled into workplace pensions, the need to set out longer-term plans to boost pension saving is paramount.

  

 “We would stress that the onus on making sure any change to the pension taxation regime will genuinely incentivise more people to save more is heightened by the announcement. With many more employers likely to level-down their pension schemes due to the end of DB contracting-out from April 2016, there is a particular need to incentivise all employers to help their employees to save more”.