The UK government has put on hold any further attempts to introduce collective defined contribution (DC), bringing to an end reforms championed by former pensions minister Steve Webb.
In a written statement, Webb’s successor Ros Altmann cited the need to work through the new pensions freedoms – which allow savers to draw down their pension from age 55 – and other recent regulatory changes as the reason for moving away from defined ambition.
Altmann said it was important that focus remained on the new pensions freedoms, and the bedding in of the state pension reform overseen by Webb, to ensure they were a success.
“That is why we have decided the time is not right to implement defined ambition, collective benefits and automatic transfers,” she said.
“The time is not right to ask the pensions industry to absorb the new swathe of regulation that would be needed to make such further reforms work effectively.”
Altmann, appointed pensions minister after the May general election saw the Conservative party win a majority, added: “The market needs time and space to adjust to the other reforms underway, and these areas will be revisited once there has been an opportunity for that to happen.”
Webb, who joined Royal London Asset Management after losing his parliamentary seat, previously argued that defined ambition was not simply an academic exercise.
Asked by IPE in June if the new government would still pursue the agenda set out during his five years in office, he said: “It may not be the first priority – there are more pressing ones. But departments can do things in parallel.”
Collective DC funds, made possible in the UK by the Pensions Scheme Act 2015, have not enjoyed widespread support.
The cross-party work and pensions select committee argued in March that the Department for Work & Pensions should suspend any future work on defined ambition until after the rollout of auto-enrolment.
Defined ambition, and the eventual introduction of collective DC, was one of Webb’s key policy goals, first articulated in 2011 when he spoke of the need to “facilitate” the re-introduction of risk-sharing in DC.