Why a lack of detail is holding up the defined ambition debate

However, if you blinked, you may have missed the mention of pensions in the Queen's Speech. "My government's pension reforms will also allow for innovation in the private pensions market to give greater control to employees," the sovereign said in her remarks. 

But what could be hiding behind that catch-all term "innovation"? If you look at the background documents of the Queen's Speech, there is mention of "collective schemes" in the private pensions bill. 

Source: Prime minister's office

The documents state the bill will make provisions for a new legislative framework for different types of pension schemes, and "would establish three mutually exclusive definitions for scheme type".

Source: Prime minister's office

In a video released after the speech (see below) pensions minister Steve Webb made mention of pooling to "reduce volatility of pensions and potentially produce better outcomes".

Interestingly, he also mentioned "new forms of pension guarantees" for DC members, drawing on the so-called "DC-plus" recommendations from last year's consultation.

Source: DWP

These have got much less exposure in the mainstream media, but are worth highlighting considering the concerns raised about what such guarantees could cost versus what they could secure for members.

But the key issues are the lack of clarity around how collective schemes will be implemented to fit with the new Budget flexibilities, as well as whether employers are interested. Last year, Webb told the FT that “big, big employers, household-name firms” have considered CDC-like schemes.

I suspect the continued lack of detail is hardly likely to get employers closer to the line, but time will tell. 

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