Ros Altmann accuses DWP of complacency over DB plans

Baroness Ros Altmann has accused the Government of complacency after it published proposed changes to workplace Defined Benefit pensions. The Department for Work and Pensions yesterday launched a Green Paper to consult on significant alterations to which cover 11m people.But Baroness Altmann, the former Pensions Minister, was unimpressed.She said: “The overall tone of the paper is based on an assumption that there is no real crisis in pension affordability and that employers can generally afford the liabilities they are sponsoring.“This complacency reflects short-term thinking, whereas this Green Paper should be an opportunity to plan for the longer term outcomes for members of such schemes.”She said: “Overall, the Green Paper will generate useful debate, but the need for action is greater than suggested by this paper. Many employers are struggling with DB scheme costs and as we leave the EU, British businesses will have many other issues to deal with. A system that helps them manage legacy liabilities is needed for the coming years.”She suggested, among her ideas, establishing a Central Discontinuance Fund or 'SuperFund' that can pool many schemes together. She said this would reduce running costs and take advantage of more diversified asset allocation would cut costs and enhance potential benefits.The green paper will look at four key areas. They are:• funding and investment• scheme affordability• member protection• consolidation.The DWP said it will consider “the security and sustainability of defined benefit pension schemes.”Member protection, funding and investment, scheme affordability and consolidation will be reviewed as part of the consultation and the government will also consider strengthened powers for The Pensions Regulator.Currently, around 11m members in the UK will rely on a defined benefit scheme for all or part of their retirement income and defined benefit pensions hold around £1.5 trillion of assets.However the DWP says that increased life expectancy, changes to working patterns and the economy mean that defined benefit schemes are operating in very different circumstances from when they first became popular.The government is committed to a system that works for employers, schemes and the 11 million people who are in a defined benefit scheme.The green paper will consider the powers of The Pensions Regulator and encourage a debate about “striking the right balance” between the needs and aspirations of sponsoring employers, members, the Pension Protection Fund, and the wider economy to ensure that no one group is unfairly disadvantaged.Pensions Minister Richard Harrington, said: “Over the coming months we’ll be working closely with the pensions industry, employers and scheme members to see what more can be done to increase confidence in defined benefit pensions.“While there is no evidence of a systematic issue, the government recognises that recent high profile cases have raised concerns regarding pensions and is looking to improve confidence in the sector and hear from a wide range of experts, employers and consumers about what action or support could be put in place.”

Ros Altmann accuses DWP of complacency over DB plans

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