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DWP to re-evaluate PPF efficiency
Further work on how collective defined contribution schemes might operate is to take place, the department for work and pensions announced in its response to its risk-sharing consultation.
Lord McKenzie of Luton, parliamentary under secretary of state, said it wanted a balance between easing the burden on employers who run occupational pension schemes and ensuring the members of those schemes have the protection they would expect.
Adrian Waddingham, senior partner of Barnett Waddingham, independent actuaries and consultants, said: "It is so sad the government has decided the legal ban on risk-sharing schemes must remain in place.
"For 20 years, the DWP-led reforms have only served to discourage workplace defined benefit pension schemes. The pension protection fund only covers a shrinking number of these final salary schemes.
"Meanwhile, the defined contribution arrangements, the only ones the government is encouraging, remain completely unprotected.
"A combination of low interest rates, falling asset values and improving longevity means most people will lose more pension in defined contribution plans than they have ever lost in defined benefit plans."
However, pension consultants and actuaries HamishWilson said it applauded the DWP's decision to explore the concept of collective defined contribution schemes.
Hamish Wilson, senior partner of HamishWilson, said: "Although the announcement of exploratory work is encouraging, it is not enough.
"Swift legislative action is vital if viable alternatives to the polar extremes of defined benefit and defined contribution are to be available to private sector employers when the inevitable mass review of pension provision takes place in the run-up to the introduction of personal accounts in 2012."
