The cross-party WPC, which is chaired by Labour’s Dame Anne Begg, appeared to be pouring cold water on the plans announced last year by the Liberal Democrat Steve Webb, pensions minister.
The report referred to the government’s strategy paper, Reinvigorating Workplace Pensions, which it published in November 2012. In this paper, Mr Webb had outlined the plans for defined ambition, which, he said, would help to share the risks between employer and employee, while providing a better form of pension arrangement for the workplace.
According to that paper, the government promised to “develop proper models and designs for DA pensions” together with the industry and consumer bodies. It also pledged to issue a publication some time this year that would outline how a DA pension scheme would work in practice.
However, the work and pensions committee report has highlighted several areas of concern, expressed by industry bodies such as the Association of Consulting Actuaries and companies such as Towers Watson.
Quoting a redaction of the ACA’s response, the report said: “the government is not doing enough to enable employers to introduce risk-sharing schemes”.
Age UK gave a cautious welcome to DA, adding that the government should not be distracted from a need to ensure that DC schemes are held to high standards.
The WPC report found: “Many millions of people will be auto-enrolled into DC schemes in the future and joining a DA scheme may be an option for only a small minority of employees.
“We therefore recommend that, while it investigates options for DA, the government remains focussed on ensuring that people are being enrolled into DC schemes that offer high standards of governance and reasonable and justifiable charge levels.”
The WPC also highlighted the problems - already cited widely by many since the creation of the twin-peaks regulator and greater powers given to The Pensions Regulator - that occupational schemes risk ‘falling through the regulatory cracks’.
The committee stated that the industry was right to be concerned about more schemes being torn between the FCA, PRA/BoE and TPR, and claimed that a three-pronged regulatory approach could result in more schemes coming unstuck or falling through the cracks.
It also recommended that the government look at establishing one regulator with sole responsibility for the regulation of workplace pensions, and questioned the suitability of the FCA to regulate contract-based pensions.