UK - The pensions review, being carried out by former National Association of Pension Funds (NAPF) chairman Alan Pickering for the Department of Work and Pensions, will only be successful if it leads to the disappearance of substantial volumes of legislation, according to the Society of Pension Consultants (SPC).
“It will not be sufficient to revise or re-express it without substantive change, or convert it into guidance,” said the SPC.
“Peripheral improvement could be on balance worse than no change at all, because it would require schemes, which have put in place administrative systems to cope with the existing burden of legislation (for example, contracting-out), to incur the expense of changing systems for what might be, in overall terms, trivial advantage.”
The SPC explained that worthwhile simplification will probably require alteration of accrued benefits. The Society added that Section 67 of the Pensions Act 1995 will need to be radically amended (or deleted) to permit this.
“Where appropriate, actuarial certification of equivalent expected value could protect members, but this certification would have to be on the basis that value was expected to be equivalent, not guaranteed to be so,” it said.
In the case of employer sponsored provision, SPC said simplification must go far enough to make employers remain, or become, willing sponsors of schemes.
“Sponsoring pension provision must be primarily perceived by employers as providing an attractive part of a benefit package understood and appreciated by employees.
“For legislation which survives the review, we would like to see some form of ‘crystal mark test’ against which it would have to prove its clarity.”
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