Press Release

ACA Welcomes Timing Of Pension Risk Sharing Consultation

5 June 2008 - The Association of Consulting Actuaries (ACA) has welcomed today’s publication by the DWP of a Risk Sharing Consultation paper (responses by 28 August) which seeks views on the ways in which risks could be shared in occupational pension schemes, set against a backcloth of continuing decline in existing defined benefit pension provision.  

“The response date to the consultation should allow Government to consult and wave through certain well-developed risk sharing ideas and include these in this year’s Pensions Bill, which is not now expected to complete all of its stages until October,” said Keith Barton, ACA Chairman.  

“It is important that measures get into this year’s Bill to ‘free up’ design at an early date, otherwise we fear closures of quality schemes will continue apace as, at present, there is no risk sharing design that sponsors see as widely acceptable under current legislation.  There is no guarantee of legislative time next year for the outcome of this consultation, so early action is needed by the autumn, otherwise reforms could be far too late.”  

“The amendment to the current Pensions Bill allowing employers to offer conditional indexation schemes – a type of risk-sharing scheme – is being re-introduced in the Lords and we see no reason why employers should not be able to offer this type of scheme within the next year,” said Keith Barton.  

“The conditional indexation proposal has been developed over a two-year period and has been tested in The Netherlands, where the outcome has been very successful in terms of ensuring the continuation of good quality pension provision.  The timing of this consultation now allows the Government the opportunity to back the proposal before this year’s Bill becomes an Act in October”.