The initial findings of our 2017 ACA pensions trend survey paint a picture of defined benefit schemes where complexities introduced over the years – largely by dint of public policy – have taken their toll.

Whilst a majority of employers fear more legal restrictions will accelerate scheme closures still further, they seem sanguine about further legal restrictions being placed on sponsors and trustees in the upcoming government White Paper. That said, the vast majority also expect support in the White Paper for some greater flexibility in law to adjust future pension increases if they are in financial difficulty.

Some key findings that the survey found are that 53 per cent of respondents say the costs associated with their defined benefit (DB) schemes are having a negative impact on pay increases, with 80 per cent saying their cost was also having a negative impact on intergenerational equity.

This is also having a knock-on effect, as 42 per cent of respondents say that their DB costs are also having a negative impact on contributions into newer schemes.

Also, 84 per cent of employers say the law should be changed so that defined benefit schemes can reduce pension increases if continuing to provide increases at the level of scheme rules will severely and adversely affect the employer, with the largest number favouring this being subject to an agreement with trustees.

As the last chancellor found, there seems to be little support for radical tax reform, although employers seem accepting of those on lower incomes getting a larger share of the relief available.

Share Story: