All we are saying – give DA a chance!

spurgeoningNestled away on pages 26 and 27 of the DWP’s consultation on Technical Changes to Auto-Enrolment is some radical thinking.

It comes in a section promisingly entitled

 “Possible easements for employers providing good pension schemes

The section starts poorly with a profoundly disappointing piece on cash balance plans which will be required to give a ridiculously high guaranteed return of 3.5% over prices after expenses.

But what follows is as fresh and free as the Dutch would have it. A vision for a new pensions contract without the constraints imposed over the past 20 years.

I can only think that this was drafted by the Minister himself – who else in the DWP would have the guts to say

Employers who use a Defined Benefit (DB) scheme to meet their automatic enrolment duty need to ensure their scheme meets the minimum quality requirements.

Contracting out will come to an end in April 2016 with the introduction of a single tier state pension, and from that time employers with DB schemes will no longer be able to rely on a contracting out certificate and will need to meet the TSS. (Test Scheme Standard in sections 22-23 of the Pensions Act 2008)

The Government is keen to explore whether there are simpler ways to determine whether schemes which are not money purchase schemes (including Defined Ambition schemes) are good enough to be automatic enrolment qualifying schemes.

This could include considering whether there is a need for quality requirements for DB schemes, or whether they always provide good quality pensions.

It could also include looking at whether there are simpler measures of quality that could be used for automatic enrolment purposes.

There is one concluding question

For the purpose of automatic enrolment, is a quality requirement needed for DB schemes at all?

This is an open invitation to the actuarial profession and to anyone who believes that in a grown up society we can be ambitious for better without being hung out to dry if we do not succeed.

The DWP are asking whether, all that is needed for a DB/DA scheme to be deemed a Qualifying Workplace Scheme is for an actuary to certify that it is worth at least 8%.

Need there be any other requirements?

Is the actuarial profession up to advising on how this could or  should be done?

Can they come together to remove prescription on DB/DA and certify that schemes Qualify on such a light touch?

Last night a K2 Kayak capsized outside our house spilling two squaddies training for the Devizes to Westminster  into the Thames only 50 yards from Romsey weir.  We dragged them out and made them tea. Then we sang a song to them.

Bring me my bow of burning gold!
Bring me my arrows of desire!
Bring me my spear: o clouds unfold!
Bring me my chariots of fire!
I will not cease from metal fight;
Nor shall my sword sleep in my hand
Till we have built Jerusalem
In England’s green and pleasant land.

They laughed and sang along.

Made me think we have fought bigger battles than this and won


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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