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MPs and trade bodies back Webb’s defined ambition plans

by Brian Cantwell on Feb 19, 2013 at 16:37

MPs and trade bodies back Webb’s defined ambition plans

MPs and trade bodies have backed pensions minister Steve Webb’s proposals for hybrid workplace schemes, which sit halfway between defined benefit (DB) and defined contribution (DC) models.

In November 2012, the Department for Work and Pensions (DWP) unveiled plans for a defined ambition (DA) pension scheme, designed to share risk and costs between employers and employees.

DB schemes are rapidly being closed to new members as they have become too costly for most employers, with many struggling under spiralling pension fund liabilities; while DC schemes have been criticised for putting too much investment risk on the individual member.

Webb (pictured) proposed two visions for DA schemes.

The first was a ‘slim-lined DB model’, which could offer a core, but lower, guarantee with additional benefits conditional on investment performance.

The second approached DA from a DC starting point, but with added guarantees.

Speaking at the Westminster Employment Forum auto-enrolment conference, shadow pensions minister Gregg McClymont said strengthening DC schemes would be easier.

‘The horse might have bolted when it comes to DB, so moderating both sides into a compromise would be hard,’ he said.

‘Maybe a better solution therefore would be to add an unknown quantity to DC.’

James Walsh, National Association of Pension Funds senior policy adviser, said: ‘At the DB end of the scale, we need some risk sharing.’

7 comments so far. Why not have your say?

A Childs View

Feb 19, 2013 at 14:40

Will we ever see some proper meat on these bones?

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Paul Barnard

Feb 19, 2013 at 17:02

Gregg McClymont said that the horse might have bolted.

I think we all know where it ended up. Burger, anyone?

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Sam De Zoysa

Feb 19, 2013 at 17:17

If it is a private/public business I could care less what they do with their existing DB schemes. I'd like to think that FRS17 has focussed minds more than anything.

As for the taxpayer underpinned schemes it should be DC, no hybrid, no underpin, no targeted, no career average, DC.

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Paul Barnard

Feb 19, 2013 at 19:03

I see. So, ambulance drivers, paramedics, nurses, teachers, social workers etc deserve a far worst deal in retirement than the private sector, many of whom simply view employees as a commodity?

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Sam De Zoysa

Feb 19, 2013 at 19:18

British taxpayers are no longer prepared, even if they are able, to sustain a secure retirement lifestyle for 20% to 30% of the workforce, which they themselves cannot hope to enjoy. They see it as simply unfair.

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Sam De Zoysa

Feb 19, 2013 at 19:23

The apartheid system created by the luxury of final salary schemes, especially the unfunded state ones, will haunt us in years to come and will become, in my opinion, a matter that fractures entirely the ethic of paying tax for the common good.

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Jonathan Kirby

Feb 20, 2013 at 10:23

And how could these be funded.

I know, what about a guaranteed sum assured and then add bonuses each year which once added cannot be removed but build up a separate pot of reserves that could be distributed if not needed at retirement.

Talk about reinventing the wheel!

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