UK regulator on DB schemes (amended)
UK - UK Pensions Regulator David Norgrove has outlined the future of defined benefit pension schemes (amended).
Speaking at an event in London, Norgrove disagreed with the sentiment that the regulator was a guardian for the privileged minority. He pointed out that the number of people in DB schemes has declined substantially under successive government regimes.
There was a reasonable chance that DB schemes would have run into trouble in the future anyway.
The National Association of Pension Funds -said defined benefit liabilities and uncertainty over pension regulation will see employers struggling to make ends meet - or just providing the most basic pensions packages they can get away with.
NAPF chief executive Christine Farnish stated that increasing costs, greater risk burdens and "chunky cheques" would become a drain on company balance sheets.
Farnish also questioned whether the hastily passed Pensions Act "with clauses still being added at the eleventh hour" resulted in a missed opportunity of having a better regulatory framework for the UK pensions industry.
Farnish asked whether the Pensions Act and its two new "powerful creatures" - the Pensions Regulator and the Pension Protection Fund - were a proportionate response to Britain's pension situation.
She accused the regulator of having a narrow focus on protecting those in the very narrow system of DB schemes.
"If you not in one then tough luck because the opportunity of being in one in the future is very small," said Farnish.
"The protection of DB members at all costs is an unfortunate piece of history we have to live with."
Alan Pickering, senior advisor at Watson Wyatt and a former chairman of the NAPF, supported the Pensions Regulator to some extent, stating that given the "straightjacket" of regulations in which the Regulator operates, it is proportionately risk-based.
"It is a case of so far, so good," he said.
Norgrove stated that the Regulator would confirm the scheme funding regime in January/February 2006, and publish the analysis of scheme returns - the first statement of DB pensions.