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.”