UK - Large-scale, collective private sector schemes should be set up in competition to NEST - allowing companies to offer DC without running their own scheme, the incoming chairman of the National Association of Pension Funds says.
In a wide ranging interview withGP's sister title Professional Pensions, Mark Hyde Harrison (pictured) who will become chairman of the NAPF on 21 October said he thought collective defined contribution, where risks are shared between members in a way similar to a with-profits arrangement, was counter to the culture we have in the UK.
But he said he would like to see very large trust based schemes being formed to compete with the National Employment Savings Trust schemes that would be like superannuation funds in Australia.
Hyde Harrison said: “I would like very large, trust-based collective organisations to run DC schemes private sector competition to NEST but without the cap so if companies wish to offer DC, they don’t have to run their own DC scheme, and can appoint a fiduciary to run their occupational scheme on behalf of all their members.
In the interview, Hyde Harrison also said he thought alternative forms of defined benefit provision such as career average and cash balance were often seen as a “poor relation” to final salary and DC.
He said: “I think all forms of [occupational arrangements] can be good if they are done in suitable scale and have suitable governance and commitment and I would like firms to be able to choose the right one for them.
“However, at the moment, I think the in between ground between final salary and DC is a very poor relation it is not well considered by government or the tax authorities and therefore you can get quite adverse effects if you try to offer benefits in that space at the present time.
That may change, but it isn’t a level playing field at the moment.”
Separately, the NAPF said todayit appointed Martin Mannion as chairman of the investment council of the funds.
He will replace Ray Martin as chairman of the investment council when his two-year term appointment ends at the NAPF Annual General Meeting on 21 October.
Mannion is director of finance and risk for the £8.6bn ($14bn) GlaxoSmithKline UK pension schemes, and secretary to the trustee for the GSK common investment fund.
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