The Department for Work and Pensions (DWP) have recently published a report with their ideas of how to reinvigorate pensions in the workplace.
Steve Webb, the Pensions Minister, has been very vocal in his support of the concept of defined ambition. Put another way it is a watered down version of defined benefit pensions or maybe just mix and match i.e. when the good times roll then have a £20 box of chocolates, otherwise you might have to make do with the £1 version.
Amongst the ideas are:
- Indexation – this would not be required or conditional on the funding level of the scheme
- Spouse – no specific requirement to provide any pensions for spouses or partners
- Leavers – converting benefits to a DC basis when a member leaves
- Retirement Age – this would be flexible and linked to any changes in the state pension age
Interestingly the suggestions would only be applicable to new pension schemes and there would be no help offered to the many suffering DB schemes in the market place.
The concept of defined ambition is an interesting but challenging one. It definitely provokes discussion amongst the pensions world. Whether it will do the same for employers is much more open to debate.