UK actuaries Lane Clark & Peacock say the UK government’s pension bill, which includes plans for a UK version of the American Pensions Benefits Guaranty Corporation (PBGC) lacks simplicity, security and choice. On the contrary, they warn, the Bill could bring more complication, make long-term security questionable and will leave employees – and ultimately employees – with little choice.
“We were hoping for real simplification, along the lines of what we have recently seen from the Treasury,” says Francis Fernandes, partner at LCP. “Unfortunately, the Bill (with nearly 250 clauses) is littered with many extra requirements that will generate significant additional compliance costs for schemes. Combined with Pension Protection Fund levies, this will only lead to more employers turning away from providing good defined benefit provision and heading for a less compliance-driven place in the defined contribution environment. That doesn’t bode well for the pension provision of future generations of employees.”
Fernandes added: “If the Government is really serious about all these new requirements, then getting them in place by April 2005 seems very optimistic. The Government itself says that introducing the PPF by early 2005 will be “challenging” – hardly a message of reassurance to members who are concerned about the security of their benefits. I find it difficult to see the Bill as truly representing a step forward in “Simplicity, security and choice”.