UK - Pension Corporation chief executive Edmund Truell has urged the government to focus on the "real pension issues", after its recent proposal to strengthen the powers of the Pensions Regulator (TPR) to deal with pension buy outs.
He continued: "Let us focus on the real pension issues in this country: excessive risk exposure, underfunding of the public-sector pension promises, and non-participation by most people under 35."
Earlier this month, it was proposed TPR be given new rights to force employer pension contributions and probe into company activity which could potentially harm the retirement benefit payments of its employees (www.globalpensions.com, 15 April 2008).
But Truell said neither taxpayers or the economy would benefit from the forced transfer of money from unconnected shareholders to underfunded pension plans that was implicit in the proposed new rules.
However, Mike O'Brien, minister for pensions reform, also wrote a letter to the Financial Times, rejecting criticism of the government's recent move.
He said the government would consult widely in order to get the changes right, and the overwhelming majority of pension schemes and corporate transactions would not be affected.
He said: "Proposed changes to the Pension Regulator's anti-avoidance powers will protect members' benefits from potential risks posed by recent developments in the buy out market and help employers retain defined benefit schemes.
"They will not result in more defined benefit schemes closing. Rather, they will prevent employers offloading liabilities onto the Pension Protection Fund, which would drive up costs for other schemes."
Speaking at an NAPF seminar on buy outs recently, O'Brien said insured buy-outs were often very sensible and effective mechanisms for securing the pensions promise.
He said: "Such models represent an innovative response to our ageing society and they are a welcome addition to the rich tapestry of the pensions market.
"But it is important that while we foster these innovative products we are alive to emerging risks and ensure that they are appropriately managed.
We must be careful not to inadvertently sacrifice hard won trust in pensions for the sake of a new market solution."
O'Brien said he wanted to ensure the regulator had the right powers to protect people's pensions.
He said: "The proposals will ensure that the regulator's anti-avoidance powers remain effective and take account of new developments in the market place."
PTL has appointed Karein Davie as a client director in its Birmingham office.
The level of interest rate hedging increased to £29.5bn of liabilities in the second quarter as pension funds continued to de-risk, according to BMO Global Asset Management's research.
UK inflation has risen for the first time since November to 2.5% in July, up from 2.4% in June, thanks to rising fuel costs and the price of computer games.
The number of DB pension scheme trustees targeting a buyout with an insurer has increased significantly in the past five years, latest research from Willis Towers Watson shows.