UK - The Association of Consulting Actuaries (ACA) is urging the UK government to encourage risk-sharing schemes by introducing legislative reforms.

Ian Farr, chairman of the ACA, last week suggested the UK should implement conditional indexation based on scheme funding and modelled on changes recently introduced in the Netherlands.

The ACA today said it has now submitted proposals to the government suggesting changes to existing legislation, in order to enable employers to offer risk-sharing schemes.

Such schemes fall between current defined benefit schemes and defined contribution schemes.

"The key to the success of risk sharing schemes is that the annual indexation of benefits would be conditional on a scheme's funding position, but supported by a funding reserve based on prudent actuarial assumptions under the new scheme specific funding regime," the ACA said.

It added: "As each year passes, the year's revaluation and pension increase would then automatically become a defined benefit subject to the funding position of the scheme, not showing a past service funding shortfall at the time."

According to the association, risk-sharing schemes offer a middle ground when private sector employers are redesigning their pension to reduce potential forward liabilities.

Farr is meeting with the pensions minister, Peter Hain, ahead of the government's response to the deregulatory review of private pensions - expected in early October - to show why proposals by the ACA would help "close the gap with public sector final salary schemes".

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