Risk sharing would revive flagging industry – ACA

Chairman Keith Barton called on MPs to take urgent action to allow risk sharing and help revive the industry.

He said: "Much of our pension energy now seems more about managing the slow death of quality schemes. It is not about building a framework to promote the growth of new quality schemes. That is not far short of a disgrace."

The ACA urged government to take a more cost-effective approach to pensions to make it easier for employers to offer quality schemes in "a harsh economic climate".

"A pre-requisite for innovation is the right regulatory environment. The ACA has been advocating over these last three years that pension legislation should be updated to permit new risk sharing pension design options, rather than frustrate their development."

The outcome of the department for work and pensions risk sharing consultation - which closed in the summer - has not yet been released.

Barton also warned that personal accounts should be seen as the scheme of "last resort".

"The reality is that the levels of retirement income which personal accounts will provide are unlikely to lead to a prosperous retirement for the majority of members. We must be on guard to ensure that they do not become the scheme of choice for employers and employees and lead to a levelling down from good existing arrangements."

Barton added there is a strong case for reexamining pension saving incentives.

"This sounds like special pleading compared with other savings - but pensions are so special.

"Unpopular as this might be with the higher paid, we might need to look at whether higher rate pension reliefs are capped to part-finance this, but - more important - all of us, including our politicians, need to recover our confidence that financial incentives can and should be used to shape and drive desirable outcomes."