UK – The UK government has insisted that plans for more certain pension outcomes are key to its defined ambition agenda, noting that this ranked above seeking clarity on any return estimates funds would offer.
Responding to a report by the committee on public service and demographic change that criticised the current pension system's "major deficiencies" and the lack of certainty offered by defined contribution (DC) provision, the Department for Work & Pensions (DWP) said this was a key area it planned to address.
It said it recognised the "need to tackle certainty" in the DC market.
It also echoed previous comments by pensions minister Steve Webb that the pensions landscape was "dominated" by the two extremes of defined benefit (DB) and DC.
"With the potential growth of the market with automatic enrolment, and decline in defined benefit as described above, it is appropriate and timely to review the possibility of different shapes of pension such as defined ambition," it said.
"We consider a key element here is about certainty rather than just clarity of estimates – and this is what defined ambition (DA) is exploring."
The response, drafted jointly by the DWP and several other government departments, noted that the forthcoming update on the DA agenda would examine whether there was "scope" for a new regulatory framework to accommodate the new schemes.
It further said it would balance "opportunities for risk sharing with an appropriate level of consumer protection".
The initial report was broadly supportive of the DA agenda, noting that it shifted discussion away from debate around DB reform to the more "pressing" matter of the functionality of DC funds.
It said at the time: "More active government intervention in this market is likely to be necessary to secure better outcomes for savers."
As part of the government's emphasis on improving outcomes, the DWP recently launched a consultation on quality standards for DC funds in which member outcomes were emphasised as important above all else.
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