UK – The popularity of defined ambition (DA) is bound to result in "patchwork" uptake, rather than the model becoming the new norm in pension provision, UK pensions minister Steve Webb has said.

Giving evidence to the work and pensions select committee yesterday, the Liberal Democrat MP said his proposed "third option" pension plan – first alluded to in late 2011 – was likely to be of interest to certain employers only.

Webb said some employers saw the pension provision as being useful for staff recruitment and retention.

He predicted that not all firms would be interested, but that "a set of perhaps more paternalistic employers, or employers of older workers" would consider it.

"It will be a patchwork," he said. "It would be lovely to say 'Here is this nice, neat model' and everyone's going to do it like that. It's not going to be like that – it's going be diverse."

Asked by committee member and Labour MP Sheila Gilmore if DA would mark a third, distinct variety of pension provision and therefore require primary legislation, Webb confirmed that was the case.

"I'm tying to create a space in the middle, which, as you say, will require legislative change," he said. "This could be DB-lite, it could be an element salary-relation but with less bells and whistles, or it could be DC-plus."

Bridget Micklem, acting head of private pensions policy and analysis at the Department for Work & Pensions, said part of her role – in the wake of the 'Reinvigorating workplace pensions' paper that outlined a number of approaches to DA – was to examine what could be achieved within current regulatory constraints.

"But the ambition, to coin a phrase, is to actually have a framework that would span the lot," she said, "so you have a whole framework that would cover the options that run from DB and the options that run from DC."

Webb said the current regulatory environment – whereby any element of pension guarantee would categorise a fund as DB, requiring the associated regulation to be applied – was not conducive to his goals.

"For example, if I want to offer my employees a career-average pension, which most employees would think was great, it is illegal for me to do that unless it is inflation-linked," he said.

Webb questioned why this was currently the case, conceding that while inflation protection was "important and valuable" some may prefer the certainty of salary-indexed pensions over the lack of certainty offered by DC.

"We should be welcoming firms who want to go beyond the minimum and at the moment we hammer them with regulation," he said.

Gilmore noted that parts of the current DB regulation stemmed from a desire to better protect scheme members and asked if the intention was to "chip away" at existing DB promises.

Webb clarified that his intention was more to allow firms to "go beyond the basic minimum" of pension provision at a time when "pure, perfect, gold-standard" DB funds had mostly gone.

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