UK - Mercer Human Resources Consulting has accused the government of making it "virtually impossible" for schemes to contract back into the state second pension.
And the consultant claims contracting-out rebates are the biggest “stealth tax” ever levelled on pension funds.
Mercer says the problem is that if companies try to contract back into the S2P, trying to align contributions and benefits with the complexities of the state system will only increase the complexities of the scheme.
Mercer European partner Matthew Demwell said: “The poor value delivered in contracting-out rebates is an even bigger stealth tax than the ACT changes.
“Hats off to Gordon Brown, as even fewer people noticed it than those who noticed the ACT changes. He’s relying on inertia and the difficulty for schemes to change their design.
“S2P takes complexity to new levels. To contract back in on a totally neutral basis, you have to dovetail both contributions and benefits with this very complex system.
“So if you contract back in and try to make sure there’s no change to benefit contributions, your own scheme becomes very complicated.”
Scottish & Newcastle head of pensions and executive remuneration Ray Martin said more schemes should look to follow his lead and contract back into the S2P.
He said: “Why don’t more pension funds contract back in? Those that switch to DC do, but I don’t understand why DB schemes do not. It’s a bit messy, but it reduces the risk to the employer.”
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.