Govt will return to pension risk sharing, Ros Altmann vows

Pot follows member and defined ambition will return to the government's pensions agenda, Ros Altmann has said. Helen Morrissey finds out more...

The decision to shelve pension innovations such as pot follows member and defined ambition was down to “timing rather than policies”, Ros Altmann has said.

The pensions minister confirmed the department for work and pensions would not proceed with the development of pot follows member or risk sharing ideas defined ambition and collective defined contribution (CDC).

Speaking at the National Association of Pension Funds annual conference, Altmann said it was essential the pensions industry is given sufficient time to get to grips with the freedom and choice reforms introduced in April.

She also said the on-going roll-out of auto-enrolment and overhaul of the state pension should take priority.

The decision, she said, was based on “timing rather than policy”.

“I am very conscious of the effects of cumulative change on schemes and providers so we need to look at what needs to be done now and what can be done later,” she said.

“We have to protect defined benefit and develop defined contribution and I am of course interested in a middle way between the two, but this is a future reform as I think we are either a bit too early or too late.

“If this shift had happened ten years ago then we might have seen interest but even if we were to work full pelt on CDC then we wouldn’t even have regulation in place by 2018.”

Speaking exclusively to Retirement Planner’s sister title Professional Pensions Altmann said she believed there is still a place for risk-sharing – where investment and longevity risk associated with pension saving is more fairly distributed between workers and employers – but it is not a current priority.

“People will want to look at how they can do risk-sharing but the retirement income flexibilities that came into force this year do change the landscape for policies like CDC,” she said.

“We need to get people used to this new environment but we will come back to this at a later point.”

The three policies put on hold by Altmann were pitched by previous pensions minister Steve Webb.

He previously said defined ambition could still work despite the freedom and choice reform package.

Speaking at the launch of the Scottish Widows Retirement Report in June 2014, Webb said he could not “envisage any constraint on defined ambition schemes access in line with Budget freedoms”.