uk defined benefit pensions consultation January 25, 2013Posted by Bradley in : consultation , trackback
Concerned about the problems faced by employers with defined benefit pensions schemes which find they are required to make additional contributions to support their promises the UK government is asking for views about adjusting the requirements. The consultation document states (having noted that such pensions give their members “a much valued layer of financial security in later life”)
Some commentators have stated that rising deficits are forcing some employers to make substantial additional contributions to schemes, which is diverting funds away from business investment and ultimately, economic growth.
With respect to the relevant stakeholders, the document states:
Given the technical nature of pension valuations and the potential impacts of smoothing, feedback would be particularly welcome from trustees, sponsoring employers, actuaries and other pensions professionals. Members of the general public are also welcome to respond.
But given that what is going on here is deciding how much less secure the “defined” aspect of defined benefit pension schemes will be allowed to be in order to “promote economic growth,” this isn’t really a technical consultation at all. Elite decision-makers like to present financial consultations in this way to control outcomes. But what about basic fairness? Figuring out an appropriate balance between supporting the entitlement to a defined benefit and allowing businesses to operate without being damaged by pensions involves technical issues, for sure, but it also involves a more fundamental weighing of the different interests involved.