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Employers have no intention of introducing risk-sharing, says DWP study

Employers have no plans to introduce risk-sharing to their pension provision, a qualitative study by the Department of Work and Pensions has found.

The study, which comprised face-to-face interviews with 30 employers, found that none of those questioned had any intention of introducing such a scheme.

The DWP says employers were generally sceptical about the risk-sharing approach and few believed there would be any advantage in adopting such a scheme over their existing provision.

Among the concerns cited by employers in the study were the complexity of risk-sharing schemes and the difficulty communicating this to staff.

They were also concerned about the real cost of the schemes and the DWP says there was “little enthusiasm” for either the conditional indexation or the collective defined contribution approaches.

The DWP says that employers with existing defined benefit schemes were committed to maintaining them as an incentive for attracting and retaining staff.

Those with defined contribution schemes showed no interest in taking on any risk in their pension provision as they were accustomed to a minimal risk approach.

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