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MPs and trade bodies back Webb’s defined ambition plans
by Brian Cantwell on Feb 19, 2013 at 16:37
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.’
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