The Association of British Insurers will today warn pensions minister Steve Webb’s defined ambition proposals would be too expensive and too difficult to regulate, according to the Financial Times.
Webb set out defined ambition options in April last year in which the Government looks to encourage employers to take on a greater share of retirement risk.
The Government is looking at how employers can be spurred to offer “risk-sharing” pension arrangements which provide employees with increased certainty.
Models include “cash balance” arrangements, where the company guarantees to deliver a fixed pension pot at retirement, and allowing employers more flexibility over the date at which a pension is paid.
But in a document to be released today, the ABI will say any guarantees on pots that can be moved between employers are likely to cost more than they are worth.
The trade body will add defined ambition schemes’ similarities to with-profits funds will invite increased scrutiny from regulators.
It will say: “While such products have the benefit of apparent simplicity to the employee, they also face formidable obstacles.”