Ahead of the publication of Steve Webb’s latest paper on reinvigorating workplace pensions, Kevin Le Grand, Head of Pensions Policy at Buck Consultants, comments on the current scheme design landscape:
“The task of designing a future new scheme concept is not proving to be an easy one. There are many potential design combinations, although probably none that is completely new.
“The future for a healthy UK workplace pensions system must lie in flexibility and breadth, so that schemes can be designed for the most appropriate balance between the interests of an employer and its employees. Any one or more combinations may provide the solution to an employer’s overall needs.”
Le Grand continues: “Pensions minister Steve Webb earlier this year floated the idea of “defined aspiration” (later morphing into “defined ambition” - DA) as a new scheme design concept to fall somewhere between DB and DC on the risk scale. The initiative was launched as a challenge to the pensions industry to apply its collective expertise to come up with ideas for appropriate designs.
“Recognising that DC will continue to dominate as a scheme design basis for the foreseeable future, Webb also asked the pensions industry to look at the feasibility and costs of providing some form of guarantee for members of DC schemes, further blurring the traditional distinctions between DB and DC.
“There are now indications that the coalition government is preparing to move from a ‘you can only do’ approach to a ‘you can do anything except’ one.”
Le Grand concludes: “We are pleased that the government seems prepared to open up the debate to consider all possible options. We will continue to engage with them.
“How far the shackles may be loosened remains to be seen. However, what is clear is that a large number of issues will need to be solved if the coalition government’s promise to reinvigorate workplace pensions is to become reality.”
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