29 August 2008
The Department for Work and Pensions (DWP) has today published a
report on Risk Sharing in pension schemes. There were thirty
employers surveyed on this topic.
The main findings can be summarised as follows:
- The drivers for pension provision were paternalism, matching
competitors' terms and continuing existing pension provision.
- Generally the employers surveyed were not keen on a risk
sharing approach to pension provision. Some employers also found
the risk sharing proposals difficult to understand.
- Employers were generally sceptical about the risk sharing
concept and very few employers perceived there to be any advantage
in adopting such an approach because they were satisfied with their
current pension provision; had concerns about the real costs of
risk sharing; and perceived risk-sharing to be a complex concept
which was difficult to communicate to employees.
- Employers were supplied with proposals for two new types of
scheme and asked for their opinion. These were Collective Defined
Contribution Scheme (CDC) 1 and Conditional Indexation Scheme (CI)
2. Neither scheme met with much enthusiasm.
- Employers with current Final Salary schemes were committed to
continuing with their current approach. Employers with Money
Purchase schemes expressed no interest at all in adopting the new
approach.
The full press release can be found here:
http://www.dwp.gov.uk/mediacentre/pressreleases/2008/aug/idpenrisk-280808.asp
