Employers and pension schemes have backed some of the principles underlying defined ambition pensions, according to a survey conducted by the Association of Consulting Actuaries
The survey results emerged as the Department for Work and Pensions published a consultation setting out its thinking on how alternatives to defined benefit and defined contribution schemes.
Over 430 pension schemes and 308 employers were polled. This revealed that larger firms - those with 500 or more employees - said they would back legislation that would permit the following scheme designs: core DB schemes with no requirement to index benefits on an annual basis; an option to convert leavers' benefits into a DC scheme; and the ability for employers to adjust scheme pension ages in line with the state pension age or another objective index.
Smaller employers expressed no review on DA ideas that sought to retain an element of defined benefit, but said scheme membership and pension contributions would be 'significantly' more if DC schemes secured a guaranteed pension income building up year by year.
A clear majority of employer's support a fixed-term pension enabling retirees to draw an income from a small pension pot over a few years rather than converting their pot into what might otherwise amount to a small monthly or annual retirement annuity. But a significant number of employers felt that a fixed-term pension should be restricted to only those retirees who defer their state pension. While others said such a facility should not be available to those retiring earlier than state pension age.
Sixty per cent of employers said that they were opposed to the government taking a role in encouraging consolidation of schemes in the pensions market, with smaller firms most strongly opposed to such an initiative.
Over three-quarters of larger employees said they would not offer a multi-employer scheme, whereas three-quarters of smaller employers agreed that a decision to opt for a larger multi-employer arrangement was either likely or possible in their circumstances.
Commenting on the findings, ACA chair Andrew Vaughan said: 'This survey gives both encouragement and an early indication of the degree to which employers of different sizes agree with the defined ambition flight-path.'
Vaughan said it was vital that the government 'act quickly and decisively to put a legislative and tax framework in place that would enable such schemes to become reality'.
The DWP consultation closes on December 19.
