IFoA responds to the Queen's Speech, June 2014

“Today’s speech highlighted that the Government is looking to widen the range of ‘pensions’ promise’ available to an individual saving for their later life income.

“The pensions landscape is changing, the age profile of society is changing and in the coming era of more flexible pensions and auto-enrolment, the IFoA welcomes any additional flexibility that could be made available to employers and members where the focus is on improving outcomes and understanding.   However, change, particularly a great deal of change over a relatively short period of time, must be carefully considered to avoid unintended consequences. 

“In 2009, a report by the Department for Work and Pensions considered collective schemes and concluded that 'there is significant doubt on the ability of such a scheme to manage risk successfully in a way which is fair to different generations of scheme members and doubt remains on the extent to which the stability of CDC (collective) schemes is dependent on a continuing stream of members' contributions.'

“Collective schemes will present challenges – not least that of a ‘part promise’.  We look forward to working with the Government to overcome these challenges, and to ensure that collective/Defined Ambition schemes are properly designed and that savers are provided with appropriate information to help them make informed decisions to encourage them to save in the most appropriate way for their later life incomes.”

In 2012 the IFoA released research that considered how a guarantee could work for Defined Ambition. For a copy of this research or further comment please contact the media office on 020 7632 1452.

Notes to Editor:

The new categorisation would be a;

• a promise on full income (defined benefit; DB),
• promise on part of the income or pot (shared risk pension scheme – a collective scheme),
• and no promise at all (defined contribution; DC).

About the Institute and Faculty of Actuaries

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2. Research undertaken by the IFoA is not commercial. We are a professional body. As a learned society, research helps us to fulfil two of our royal charter requirements; to further actuarial science and serve the public interest. 

3. Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues

4. Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

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