Govt Sets Out Proposals To Reshape Workplace Pension

The government is setting out a range of proposals to reshape workplace pensions for future generations.

These are designed to create more certainty for individuals, share investment risks more equally, and help employers to keep offering the best possible workplace pensions.

The government committed in the coalition agreement to reinvigorate private pensions.

Defined benefit (DB) schemes have declined rapidly in recent years. The percentage of open schemes has more than halved since 2007 – from 36% to 14% – leaving just 841 schemes remaining open today.

Over the last year, the Department for Work and Pensions has worked closely with employers and the pension industry to explore options for creating new defined ambition pensions, where risk is shared between firms and workers.

These include creating a new legal framework to allow employers to continue to offer salary-related pensions instead of closing their DB schemes; and enable defined contribution pensions that give savers a more certain outcome in retirement.

Minister for Pensions Steve Webb said: "I want people to have the best pensions possible, where risks are shared between employers and their workers. Final salary pensions have been in long-term decline and if we do not act it could disappear altogether. We want to help the best employers offer good alternatives including new forms of salary-linked pensions.

"We have looked at the best pension arrangements around the world and want to give British workers the chance to join such schemes. Our proposals for defined ambition pensions are designed to reinvigorate workplace pensions, providing people with more certainty about what they will get in retirement."

(CD/JP)