As part of the Opposition’s scrutiny of Government pension strategy, the Tories are looking at proposals to create hybrid defined-benefit and defined- contribution schemes.
Hermes Equity Ownership Services senior adviser David Pitt-Watson has drafted a paper for the Conservatives on the future of DB schemes, which suggests that the fund management industry should design low-cost, low-risk products to create pensions such as the DB schemes available in Holland.
Pitt-Watson says a consensus is needed to take forward any revival of DB schemes and suggests assembling organisations such as the Confederation of British Industry, the National Association of Pension Funds, the Trades Union Congress and the Financial Reporting Council to agree “a plan of action to promote DB pension savings”.
Shadow pensions minister Nigel Waterson says the Tories are talking to the Association of British Insurers and the NAPF and are looking at a range of ideas but are not ready to announce anything specific yet.
He says: “We are looking very hard at all sorts of ideas in terms of hybrids between DB minus or DC plus to try and find ways of sharing the risk between employers and employees.
“There is a different situation in Holland but they do have things like conditional indexation, which we are quite interested in. Then in the US, they have got these cash balance schemes, where again they are trying to share the risk between emp- loyer and employee so we are looking at all these models to see what is the best way forward.”