THE GOVERNMENT launched proposals for workplace pensions reform yesterday, in an attempt to reduce the burden created for employers in the wake of new auto enrolment laws
The proposals revealed by Department for Work and Pensions include regulatory changes designed to allow new forms of defined benefit pensions, which are meant to give employers more flexibility over the nature of benefits while maintaining certainty for employees.
John Walbaum of pensions and risk consultancy Hymans Robertson suggested that some would need more convincing: “If there was a substantial appetite amongst employers for greater risk sharing, we would be seeing more employers pursuing defined benefit arrangements.”
Raj Mody, head of pensions at PwC, added: “I doubt many employers will want to initiate these kinds of protections for members and underwrite them directly, for fear of future governments ramping up the regulatory burden”
Auto enrolment laws were introduced last year to address the rapid decline in employers providing direct benefit pensions. Increased life expectancy, higher inflation and poor investment performance have made similar schemes too costly for many employers