View more on these topics

ABI warns defined ambition will be too costly

Steve-Webb-Attr-David-Spender-700x450.jpg

The Association of British Insurers has warned pensions minister Steve Webb’s defined ambition proposals will be too expensive and too difficult to regulate.

Webb set out defined ambition options in April last year in which the Government is looking to encourage employers 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 released this week, the ABI says any guarantees on pots that can be moved between employers are likely to cost more than they are worth.

The trade body went on to add defined ambition schemes’ similarities with with-profits funds will invite increased scrutiny from regulators.

It said: “While such products have the benefit of apparent simplicity to the employee, they also face formidable obstacles.”

Hargreaves Lansdown head of corporate research Laith Khalaf says: “Employers are not interested because they do not want to take risk onto their balance sheets so I do not understand why the Government is spending time and resources on this. Hopefully the ABI’s comments will strike a chord with the Government.” 

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com