UK - Pension scheme members may lose out as part of any simplification of pensions, the Actuarial Profession claims.
In its response to the Department for Work and Pensions simplification review the Faculty and Institute of Actuaries said occupational members would have to accept the loss if genuine simplification was to be achieved.
The profession noted that the impact of any simplification could be alleviated by allowing long periods of time for schemes to adopt any new regulations.
Chairman of the Faculty and Institute of Actuaries Pensions board Peter Tompkins said: “The only way that we believe simplification can be achieved is if there are a few people who win a little bit and a few people who lose a little bit.
'The government has got to accept that if it wants things to be more effective and less expensive to deal with they have to have a few rough edges which may mean that some people have slightly poorer terms than they had before.”
Tompkins notes that when previous legislative changes have taken place all pension scheme members had protection against changes – a fact which meant that pension managers and sponsoring companies have had to deal with many different sets of regulation at once.
Tompkins added: “You have got to have something that makes it easier to administer or there is no point in having any kind of simplification at all because you just get mire regimes.”
The submissions also sets out the need for reform of OPRA.
The Actuarial Profession thinks the current industry regulator has limited ability to exercise judgement and recommended its role should be changed from a ‘tick-box’ regulator a ‘thinking’ regulator.
The report said: “The initial role given to OPRA has focused on detailed compliance and limited its ability to exercise judgement. This had led to a widespread belief that its resources are misallocated, and compliance based on fear rather than respect for the underlying objectives.”
The actuaries' submission said: “A more ‘thinking’ version of OPRA could command greater respect across a wider remit exercising judgement based supervision.”
The Actuarial Profession also urged the Department for Work and Pensions to confirm that the Human Rights Act would not prevent the implementation of legislative changes.
The Faculty and Institute of Actuaries submission added: “Unless schemes can be given confidence that they will be safe in making changes we are afraid that the initiative will be destined to achieve little.”
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