Pensions  

Webb ‘should jettison defined ambition plans and focus on AE’

AJ Bell’s head of platform marketing said employers did not want to get “embroiled in complex schemes”, referring to the department for work and pensions’ blueprint for risk-sharing schemes, the 70-page consultation Reshaping Workplace Pensions for Future Generations, from November 2013.

Mr Morrison said: “I do not see why he is spending so much time arguing for defined ambition schemes when employers are responding to the radical changes posed by AE. That particular project is far from over and great portions of the public are still to be persuaded about the merits of long-term saving.”

He also echoed comments made last year by John Broome Saunders, actuarial director for London-based Broadstone, regarding employers’ likely resistance to the plans.

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Mr Broome Saunders said employers “had their fingers burnt” by defined benefit schemes in the past and would not be incentivised to take on liabilities again.

Mr Morrison added: “What employer will want to turn the clock back and invite some of the risks associated with DB?”

A poll conducted by the Association of Consulting Actuaries last year found surprising levels of support for the plans among employers. Some 61 per cent of businesses would be open to the idea of schemes that capped pension costs while offering greater certainty to members.

A DWP spokesman said consultation responses would be published “in due course” but could not confirm a date.

Background

The government has remained tight-lipped about which risk-sharing models will come into practice. However, it has strongly hinted collective DC schemes will be central, expected to be outlined in the Queen’s Speech later this year. While it has attracted support from the likes of the Trade Union Congress, Alan Higham, director of Annuity Direct, has questioned whether legislation would need to change to allow collective DC schemes to operate in the UK.