On the go: The Association of Consulting Actuaries is calling for the next government to bring legislation to facilitate the wider simplification of defined benefit schemes, as part of its manifesto for the December elections.
The professional body argued that subject to certification, DB plans should be able to simplify their benefit structures to improve member understanding of benefits.
This will also have the “potential to materially reduce ongoing scheme administration costs, facilitate more efficient hedging, and attract potentially more attractive buyout options, improving benefit security”, the ACA stated.
This simplification would make it easier for DB schemes to include data in pensions dashboards, and help members to better understand the total value of their benefits, the actuaries noted.
The ACA’s proposal follows a policy paper published in November 2018, which outlined the idea of converting complex historical benefits into a single simple structure.
The association stated that this new legislation should complement the cross-party agreed reforms that it hopes will form a reintroduced Pension Schemes Bill in the new parliament.
The ACA’s manifesto also includes six other proposals, since the actuaries believe the public should be pre-advised of the parties’ broad approaches on how they propose to boost pensions and savings outcomes, and what major tax changes might be considered.
Association of Consulting Actuaries’ manifesto
A fresh boost to auto-enrolment, including increasing minimum contribution rates and widening coverage during the next parliament.
An extension of pension freedoms to younger savers (subject to appropriate safeguards and incentives) to promote intergenerational fairness.
Significant simplification of the pension tax regime, with clear policy goals and extensive consultations to minimise unintended consequences.
Legislation to facilitate the wider simplification of DB schemes, with guaranteed minimum pensions equalisation/conversion providing the perfect catalyst.
A commitment to a better social care regime.
State pension sustainability with replacement of the triple lock.
Clarity over the state pension age to help people plan for their retirement/later life.
