A Government minister has labelled defined-benefit schemes as the pension for middle-class, better-educated white men.
Speaking in a debate in the House of Lords, Department for Work and Pensions under secretary Baroness Hollis said: “Defined-benefit schemes reward those who have high salary progression and long job tenure. Middle-class, better-educated white men do well out of such schemes. Defined-contribution schemes benefit other people more effectively.”
Hollis's statement has sparked fears among pension experts that the Government is now pushing DC schemes as politically correct despite the advantages that DB schemes offer to all workers by removing investment risk and offering guaranteed benefits.
Friends Provident manager (pensions research and development) Chris Bellers says: “Is this evidence that DC schemes are now politically correct?To say they benefit middle-class, better-educated white men is inflammatory.”
Norwich Union head of individual pensions Ian Buckle says: “It is better-educated people who have job mobility and benefit from DC schemes.
“The opposite group of people – such as blue-collar factory workers who do not move around in their job – do very well out of DB schemes.”
Trade union Amicus, which represents engineers, electricians, finance and manufacturing workers, says its members are prepared to strike for their final-salary pension rights.