UK - David Willetts, the former shadow pensions minister, has slammed defined contribution (DC) schemes for leaving future retirees with inadequate retirement provision.
Speaking at a pensions conference in London, Willetts said a more flexible, less costly version of defined benefit (DB) schemes or a hybrid DB/DC scheme was desirable.
He added that in his opinion, the DC model was not a stable solution in its present form.
Speaking to Global Pensions, Willetts called on the government to make it easier for companies to put in place hybrid DB/DC plans to best serve retirees' interests, rather than placing the onus on the public.
He said: “I always thought the most interesting part of policy was the bit in between.”
He warned it was “difficult to imagine a long term stable future” with the pensions industry in its current state, and added that he could foresee a situation in which people would not be able to retire comfortably with a decent level of income, forcing them to continue working.
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The DB white paper sets out plans to review the funding regime, with 'prudent' and 'appropriate' possibly redefined. But James Phillips asks if this could this signal a return to an MFR-like approach?
The trustees of GKN's pension schemes have agreed a package of mitigation measures that would improve funding to a "more prudent level" if Melrose's offer is accepted by shareholders next week.
While the new powers are welcome, most respondents doubt it will make a difference to the outcomes for members, Pensions Buzz respondents say.