Nine in every ten defined benefit (DB) pension schemes in
the UK are closed to new entrants, while those closed to future accrual has
doubled to one in every five, according to the Association of Consulting
Actuaries (ACA) – which has called for a special pensions commission to be
formed to challenge the legal and regulatory hurdles standing in the way of
long-term pension reform.
A poll of UK companies by the ACA shows that only 6% believe the government’s
stated policy of supporting quality pensions is working; 87% of DB schemes have
closed and 91% of them show a funding deficit, while a third are currently under
review while changes in forward accrual and a move to career average are being
But the rise of defined contribution (DC) schemes has not filled the gap.
Half of all DC schemes attract employer contributions of less than 6% of
earnings and less than 4% from employees, ACA says, while pension outcomes for
an increasing number of private sector employees are likely to worsen over the
years because of much lower investment returns and people living longer.
The ACA says 76% of employers would support a ‘middle way’ pension scheme
somewhere between DB and DC, if legislation allowed. The association suggests a
new, independent body should be set up to lobby government to force through
changes to pensions legislation that will ease the way for business to respond
to the myriad funding and longevity issues they face.
“The commission should be charged to come forward with the legal changes
needed to allow employers to offer a wider range of pension designs, where
employer costs can be capped in the event of demographic and economic changes,
while also reducing the volatility in pension outcomes for employees,” says ACA
chief executive Keith Barton.
Join Financial Director, Oracle and a host of ‘Fast Data’ experts to discover how financial professionals can help create a Fast Data business
Wolseley is to cut up to 800 UK jobs and close around 80 branches costing the company about £100 million, the plumbing and heating supplier said on Tuesday despite reporting rising sales and profits
GoCompare is to demerge from esure and and be floated on the London Stock Exchange with the aim of boosting growth and performance
Three former Tesco executives, including the former finance director of Tesco UK, have been charged with fraud in relation to a £263m accounting scandal at the supermarket chain