Industry believes in DB salvation

A survey of more than 200 trustees, consultants and sponsors, by law firm Nabarro, revealed the bulk of respondents believe a form of DB, less onerous on employers than final salary, will eventually form the mainstay of occupational pension provision.

But they felt the tax regime around DB provision, and the Pensions Regulator’s power to enforce funding requirements is preventing a healthier workplace savings environment, where risk associated with market movements is shouldered entirely by employees.

Unpublished responses to the question “what can the government do to save final salary pension schemes?”, seen by schemeXpert.com's sister publication Pensions Week, show optimism for the future of pensions providing set retirement incomes, despite the sharp decline in final provision over the past decade.

“Some form of DB provision is in my view inevitable in the longer run,” said one consultant.

“Tax relief and other tax incentives for executives and other staff to be covered by the same arrangement is vital for continuing employer support of company wide DB schemes (possibly of a CARE type or some kind of hybrid).”

A trustee added: “Change the legislation that requires revaluation, spouse's benfits, etc…allow companies to design an affordable, perhaps career average, basic pension to which members can add optional extras (higher base level, inflation proofing, dependants' benefits etc) either by extra contributions, sacrifice of basic benefit or a combination of both.”

Meanwhile another consultant said: “Do away with the Pensions Regulator and other over regulation.

“Allow companys to fund on a realistic basis rather than the excessively prudent basis now required, with the consequent high deficit and future service contributions required.”

Nabarro partner Anne-Marie Winton (pictured) praised the respondents’ “pragmatism”, and added to their calls for a “radical” stripping back of tax and funding burdens on sponsors and individual savers.