Pension risk-sharing call receives mixed response

Pensions minister Steve Webb’s latest call to achieve a better balance of pension-saving risk between employers and employees, by creating defined ambition pension arrangements, has received a mixed reaction.

Webb said the government is investigating cash-balance style arrangements, whereby an employer guarantees to deliver a fixed pension pot at retirement but the employee bears the risk of how much pension that pot will buy.

Another model shares the uncertainties of life expectancy, so employers pay a guaranteed pension, but the date on which it is paid can change if an employee lives longer than predicted.

But Deborah Cooper, head of Mercer’s regulatory group, said: “If the government can freely load on extra risks by changing a regulation here or there, that makes it difficult for employers to be able to plan.”

Laith Khalaf, Hargreaves Lansdown pensions investment manager, added: “There is no appetite to have some kind of risk-sharing half-way house. Employers either want to take all the risk or don’t want any risk.”

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