UK - The UK's Conservatives opposition party has confirmed they would "reign back" on regulation of defined benefit (DB) schemes if they enter power after the next general election.

Speaking at the Association of British Insurers (ABI) Savings Conference 2008: Living Longer, Living Better, Chris Grayling, shadow secretary for work and pensions for the Conservatives, said increased longevity would always have meant DB schemes are difficult to fund.

He said the Conservatives have "embraced proposals for risk-sharing", developed by organisations such as the Association of Consulting Actuaries (ACA), including the introduction of conditional indexation, albeit amendments to the current Pensions Bill to allow this have all failed.

Grayling said: "We need de-regulation that encourages innovation and allows flexibility to tailor a huge range of products to schemes. The role of government is to get out of the way. It should not seek to prescribe how to offer products. We want a new generation of products to emerge, we want to reign back on regulation and again look at risk-sharing."

He added the amendments already brought forward by the party, and rejected by government, would have allowed risk-sharing to happen "straight away", and added "if we get into power after 2010 we would want to bring it in straight away".

The shadow minister told delegates that a "substantial number of DB schemes will disappear in the next two years, and we can either allow it to happen or can take steps to share the risks".

Grayling also admitted that without addressing the issue of means-testing, personal accounts "would not fly", could turn out to be "another pension false start" in the wake of stakeholder pensions, which were introduced as a low cost occupational pension in 2001.

He said: "If we don't address the means-testing issue, then it is difficult to see how personal accounts will be anything else but another pension false start. We can't let that happen, as we can't have yet another pension reform."

Following the pre-Budget report on 24 November, in which the government announced the lifetime and annual allowances for receiving tax relief on pension contributions would be frozen from 2010-11 until 2015-16, Grayling said the move was "yet another tax raid on pensions". (See earlier IPE article: UK freezes pension limits until 2016)

However, Ian Pearson, economic secretary to HM Treasury, warned the government spends £30bn a year to" incentivise pension saving", with the majority going to higher rate taxpayers.

"There comes a point when its not right for taxpayers to provide tax relief for higher earners," so the government decided to freeze the allowances for a five-year period, which he claimed would affect "less than 1% of savers".

Pearson highlighted "these measures don't constrain pension saving, but they will limit tax relief on savings", and suggested the move makes the system fairer and targets support where it is needed.

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