UK - NAPF CONFERENCE: A flood of scheme closures are inevitable because the government is ignoring the pensions crisis, OPAS warned.
Chief executive Malcolm McLean accused the government and the DWP select committee of “playing down” the scale of the crisis, and warned that there needs to be a radical overhaul of funding and wind-up rules to help employers keep DB schemes open.
Rather than persisting with the proposals in the Green Paper – which he described as “long on detail but short on solutions” – McLean said the government must offer additional tax incentives to encourage employers to continue to run schemes.
And it must come up with a set of definitive proposals to address “wind-up disasters”, such as the Maersk pension scheme.
He added that public confidence in pensions is fading fast because of the complexity of the current system, falling annuities, and the recent spate of employers closing down good final salary schemes on grounds of cost, replacing them with “inferior” money purchase schemes.
“There are some difficult political nettles to be grasped here but grasped they must be and soon, before the trickle of scheme closures turns into a flood and confidence levels plummet even further.
“Although, up to now, this has affected only a relatively small percentage of members, the fall-out from the well-publicised ‘disaster cases’ has been immense. It has tarnished the image of defined benefit arrangements to the extent that some people now view the former ‘Rolls Royce’ of pension schemes as more akin to a Robin Reliant.”
He concluded: “The ‘crisis, what crisis?’ message did not stand up 25 years ago in prime minister Jim Callaghan’s day.
“It will not do so now.”
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.