UK – The Association of Consulting Actuaries believes Lord Turner is wrong to think that defined benefit pension schemes are doomed – and that the proposed ‘Britsaver’ plan represents a dumbing down.
The National Pensions Savings Scheme, nicknamed the Britsaver, was one idea put forward by Turner’s Pensions Commission last month.
“Lord Turner sees ‘defined benefits’ as doomed but in this he is wrong,” writes association chairman Adrian Waddingham in a letter to the Financial Times.
“With the right help, we could once again give employees rather better benefits than the proposed Britsaver,” Waddingham said. “Dumbing down pensions to the Britsaver level is a real threat.”
He added that Pensions Commission chairman Lord Turner was right to say that final-salary schemes were too expensive although it “does not follow that such schemes are bad”.
Waddingham put forward a three-part remedy. Firstly, the government should drop the need to add compulsory “bells and whistles” to pensions.
Second, it was not the fault of good employers that people now live longer, so why are they forced to carry the extra cost alone?
The third idea was to offer a modest National Insurance reduction for employers willing to sponsor good schemes. “It worked before and it could work again.”