UK - The chance for pension reform will be lost if industry responses to the government Green Paper focus on defined benefit issues, money purchase providers warn.
They believe media attention on high-profile problems in the DB sector – including disputes at Maersk and ASW where scheme members are facing huge benefit cuts – will massively outweigh the future needs of DC in responses to the Green Paper.
Invesco Pensions chief executive David Butcher said there was a distinct possibility the government will not get the right steer on the DC side of things and that pensions reform could end up as a “missed opportunity”.
He stressed that DC will be the dominant form of pensions provision in the private sector over the next 10 years.
Momentum Financial Services national accounts director John Robbie agreed.
He said: “While the majority of pension provision in the UK has historically been provided via defined benefit arrangements, the future focus of pensions legislation has to concentrate on defined contribution arrangements.
He added: “Whether we like it or not, this is the direction that the industry has moved in over the last 15 years and we have to make sure that any change in legislation meets the challenges of the future rather than trying to change the past.”
But Aon head of investment research Simon Martin stressed the “critical short-term” issues concerned DB schemes and these were the ones the government needed to address.
He said: “The Green Paper is looking at protection in DB schemes. The system of protection in DC scheme is effectively already there.
“You don’t have the same degree of concern with DC and the Inland Revenue has already covered the tax issues in its report.”
Consultation for the Green Paper ends on March 28.
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.