The pensions minister has admitted he doesn’t know what schemes will be created as a result of the new rules he is pushing through.
Steve Webb was addressing the Pension Schemes Bill committee this afternoon when he said that the whole point of the legislation is to encourage innovation.
He said: “We don’t know what models people will come up with. What we found out is that there are so many different permutations.
“We have set out our general approach and if something doesn’t seem appropriate we are reserving the right to say no.
“We are setting out a framework which is right for what we can envisage.”
The bill, which is currently at committee stage in the House of Commons, sets out three types of pension schemes.
These are defined benefit, which offers a full promise for what a member’s income will be while they are saving for their pension, shared risk, which offers a promise about some of the outcome of the scheme but not all, and defined contribution, which doesn’t offer a promise of what a member’s income will be while they are saving.
The bill is aimed at making it easier for employers, members and third parties to share risk.
It is expected to become law before next year’s General Election.