The National Association of Pension Funds (NAPF) responded to today’s Budget announcements around the State Pension and the Pensions Regulator.
The introduction of a new flat-rate State Pension will start a year earlier, in April 2016.
Joanne Segars, Chief Executive, NAPF, said:
“We strongly welcome proposals for a new, single tier state pension. But the Government has to ensure that the changes are implemented in a way that does not damage company pension schemes. This is a very tight timeframe and we question whether it can be delivered. Schemes need flexibility and time to adapt.
“If the Government gets it wrong then it risks sparking a fresh round of final salary pension closures in the private sector. Businesses that get caught on the wrong side of these changes will lose a significant rebate from the end of contracting out, and this extra cost may prompt them to close their pensions altogether.
“We have waited many years for these reforms. An overhaul of the state pension is long overdue and a simpler, fairer system helps set a clear foundation on which people can build their own savings. It would be a shame if mistakes were made in a rush to implement the changes.”
The Pensions Regulator will be set a new objective to support pension scheme funding arrangements that are compatible with sustainable growth for the sponsoring employer.
Joanne Segars said:
“We have long been calling for a new statutory objective for the Pensions Regulator to help secure the future of pensions, so we are pleased with today’s announcement.
“We back the broader focus of the objective and look forward to seeing more detail. The new objective needs to strike the right balance between protecting savers’ interests, helping good defined benefit pensions remain open, and ensuring pension regulation does not hinder investment and growth. We will be keeping a close eye on how the Regulator meets this new goal.”
Ms Segars added:
“The requirement for the Regulator to allow use of the full flexibility in the current funding regime is a sensible approach and is in line with what pension funds want. This should give businesses running final salary pensions some much-needed relief from the effects of low gilt yields and quantitative easing.”
Notes to editors:
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]