UK - Pension funds in the UK should consider the introduction of a pot option that would safeguard the overall value of any contributions made, according to the country's pensions minister.

Speaking at an event organised by EDHEC and hosted by Axa Investment Managers, Steve Webb deviated from his recent call for risk-sharing among employers and employees, advocating investment approaches that would offer a guaranteed retirement saving.

Guaranteeing contributions is not a new approach, with supermarket Morrisons recently announcing that its new auto-enrolment compliant pension vehicle would be a cash-balance arrangement, with the company underwriting the value of contributions.

Cash balance schemes are currently legal and would not require new legislation.

They are similar in principle to the German Directzusage - or 'direct promise' - which acts as a supplementary pension scheme in the country.

Webb said he wanted the industry to "innovate and think hard" about any changes that would create greater certainty.

"With the dawn of automatic enrolment, the market is growing, so now is the time for the pensions industry to look at the market gap in relation to affordable guarantees and provide the products consumers are seeking," he said.

"For example, one end of the spectrum could be providing an affordable 'moneysafe' guarantee where the member would get back at least the nominal value of their contributions."

He clarified that this would consist of individual and company contributions, as well as the government's tax relief.

The Liberal Democrat minister said another option would be to offer an investment approach that reduced the probability of capital losses, such as the one pursued by the National Employment Savings Trust.

The Department for Work and Pensions said the above ideas would be considered as part of the government's defined ambition (DA) consultation, due later this year.

Webb has spoken at length about his aim to introduce a "third way" pension approach, with the DWP saying that aspects of risk-sharing - both intergenerational and with employers taking on an element of risk as with previous defined benefit schemes - likely to be discussed in the forthcoming consultation.

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