DWP’s call for evidence on Options for Defined Benefit schemes

Commenting on the DWP’s call for evidence on Options for Defined Benefit schemes, Patrick Bloomfield, Partner and Senior Actuary, Hymans Robertson, said:

The focus on boosting DB investment in UK productive finance assets has a sense of putting the cart before the horse. What we need are policies that create a DB renaissance, to align DB schemes with wider social interests, by extending time horizons and increasing risk appetites. This would lead to the investment in productive assets and higher savings rates that the Government desires. A rebirth of DB would be best achieved by updating DB’s statutory objectives to balance security of accrued rights with current and future pension provision. This would pave the way for meaningful and lasting DB investment in UK productive finance, rather than a faddish policy flash-in-the pan.

There’s a role for a voluntary DB public consolidator. It would be more effective if it stimulated the DB consolidation market, rather than becoming a monopoly consolidator with taxpayer backing. The PPF has a natural head-start to be a voluntary public consolidator, but its objectives also need reorienting to support open, ongoing schemes. We wholly oppose any public consolidation vehicle appropriating assets from the existing PPF employer insolvency arrangements, as this would be tantamount to asset appropriation for a government investment initiative.