The Government must unpick decades of legislation and regulation if it wants to encourage pension funds to take a more long-term approach, according to the Association of Nominated Member Trustees.
Speaking at the conference, ANMT co-chair Janice Turner said accounting rules used by schemes make it next to impossible to take a long-term view.
She said: “What this Government needs to do is change the rules so pensions schemes have half a chance to do that because at the moment all the regulation and legislation we are facing is really working against us doing that.” She said contribution holidays, introduced in the 1980s, undermined the ability of funds to deal with recent market volatility, encouraging them to take risks. She said the International Financial Reporting Standard introduced in 2004 forces schemes to use the state of assets today rather than the projected state of assets in future to figure out if they can cover the costs of future pension payments.
Turner said: “Gordon Brown introduced fashionable accounting rules which instantly made them widely unstable and forced schemes to look at short-term horizons instead of 30 years into the future. If you are using assets as they are now, if the stockmarket is up, you are fine, if it is down, you are in serious trouble.”