The government must not "lose sight" of improving defined contribution (DC) pensions as the Department for Work and Pensions (DWP) develops its defined ambition (DA) project, industry figures warn.
A consultation into three potential risk-sharing models, including flexible defined benefit (DB) and collective DC (CDC) closed yesterday, following pension minister Steve Webb's commitment to make it easier for employers to provide more than basic DC (PP Online, 7 November).
The People's Pension said it welcomes the "innovative ideas" within the consultation, but urged Webb to maintain focus on improving standards in DC provision.
Head of policy Darren Philp said: "The government is right to move away from its current two-bucket approach to regulating pensions. The ideas presented in its consultation open up the way to innovative pension solutions and are a step in the right direction to removing the straightjacket of regulation."
Philp said it is important to ensure schemes are "durable and well-run", and called for more powers for The Pensions Regulator (TPR) to oversee auto-enrolment (AE) schemes, particularly master trusts.
He added: "If, as the government argues, strong governance and scale are an essential part of a good DA scheme, then the same rings true for DC schemes where there will be more savers and the risks to the member will be even greater."
The National Association of Pension Funds (NAPF) noted that DA "will not be for everyone", and stressed the importance of ensuring DC schemes are fit for purpose for huge extra numbers saving through AE.
However, the organisation's head of policy Helen Forrest said DA offers a "once in a generation opportunity" to overhaul tax and legislative frameworks to allow a number of models to "flourish" and alleviate the pressures of the end of contracting out.
She said: "The timing of any legislation will be critical. Employers who contract in their DB pensions between now and 2016 are already hard up against it.
"This legislative framework will alleviate the administrative burden and costs of contracting in so the NAPF urges the government to co-ordinate the timing of legislation for the new DA framework to support these employers."
Webb's DA project has faced some criticism, with Lord John Hutton recently calling on the government to stop "banging on" about DA and focus on DC (PP Online, 21 November).
HSBC Bank Pension Trust chief executive Lesley Alexander and Whitbread group pensions director Lesley Williams also raised doubts about whether there is genuine interest from employers for any of the DA models proposed (PP Online, 12 December).
However, Webb has stressed that the DWP will only proceed with proposals if employers and the industry back DA (PP Online, 26 November).
