UK - The government's moves to safeguard pensions will hasten the death of defined benefit schemes, Association of Consulting Actuaries' chairman Gordon Pollock warns.
He believes the government’s latest action plan will add “new forward liabilities” and encourage firms to review their schemes.
Pollock said: “The most recent reforms have very little in them that will encourage employers to continue with defined benefit provision.
“By adding new forward ‘liabilities’ in terms of full buyout and pension protection fund costs, they provide an incentive – if any was needed – to review arrangements and take action to curb future pensions costs.”
Pensions Commission chairman Adair Turner told the IoA annual dinner that defined benefit schemes would disappear from the private sector within 30 years unless immediate action was taken by the government.
Turner said its research had found that up to 60% of DB schemes – as measured by the number of employees in them – had been closed to new members.
And he said: “That closure is continuing rapidly.
“It means that whereas today we talk of DB schemes with over nine million active members, unless something changes, the picture in, say 2030, will be one in which DB membership is almost entirely public-sector based.”
Turner added it was “regrettable” that firms were passing on investment risk to individuals, particularly low earners, as the state pension level meant they could not afford the extra risk posed by DC schemes.
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