Pensions minister Steve Webb has warned defined benefit schemes will be “dead” unless the Government drives through reforms to reduce the risk borne by employers.
The Government is currently assessing how it can ease the financial and regulatory burden placed on firms who want to offer DB pensions as part of its “defined ambition” reform agenda.
Speaking at the launch of the annual Scottish Widows UK pensions report in London this week, Webb said: “We want to come up with a DB structure that does not cost significantly more than a relatively generous DC scheme. So you could strip out inflation risk and potentially strip out longevity risk and then look at the costs of providing that.
“The reality is if I stand idly by and do nothing, DB will be dead. I think at some point the DC pendulum will swing back towards DB and when that happens, we need to have the architecture in place to allow employers to offer those schemes.”
Trades Union Congress assistant general secretary Kay Carberry said: “We are interested in talking about the ‘DC plus’ end of defined ambition but we are not at all convinced that any further deregulation for defined benefit will keep more DB schemes open.”