Editorial: The two-headed monster
Defined benefit scheme managers and trustees could be forgiven for feeling perplexed at the government’s attitude to the benefits they oversee.
“For DB schemes, the government has been examining ways to ease the regulatory burden on employers, whilst protecting the benefits of scheme members,” stated this month’s paper from the DWP on reinvigorating workplace pensions.
They must be wondering why the DWP cannot shift on any of its legislative bugbears
The proposals included a few options to make DB provision less burdensome for employers, such as providing the ability to offload deferred members.
The proposals included a few options for how DB provision could be made less burdensome for employers to provide, such as the ability to offload deferred members.
Everyone knows the story. Layer upon layer of regulations have made these schemes unaffordable for the many, pushing their cost and risk-balance far beyond what was originally intended.
If the pendulum swung back a bit, then perhaps a midway point between the unaffordable and the unpalatable could become popular.
But at the same time, the government is pushing ahead with its tinkering to the legal definition of money purchase that will add another layer of cost and uncertainty to a swathe of schemes.
That is two years after the Supreme Court ruled the other way, prompting an immediate announcement from the government that it would change the law to get its way.
It is hard to find anyone that supports this change. Indeed, legal experts even suggest the security of some benefits that were previously considered money purchase, and thus escaped the Pension Protection Fund, could be reassessed.
The government may yet reconsider whether making this change effective retrospectively (see page seven) is worth the upheaval it will cause to managers dusting off past wind-ups, debt payments and apportionments.
Along with the long-running saga of guaranteed minimum pension equalisation, advisers are again playing wait and see.
For the managers, they must be wondering why the DWP cannot shift on any of its legislative bugbears, and continues to add shackles to DB even as it talks about unlocking them.
Ian Smith is editor of Pensions Week. You can follow him on Twitter @iankmsmith and the team @pensionsweek.