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Greater flexibility
is needed on pension risk sharing, says financial consultant Hewitt
Associates.
Hewitt has welcomed last week’s consultation document on Risk
Sharing, released by the Department of Work & Pensions (DWP),
and believes it is a step forward in solving the UK’s pension
issues.
“We believe that Risk Sharing can be a key means of combating
some of the major issues currently facing pension provision in the
UK. These we believe are most notably over-regulation and over-protection
of Defined Benefit (DB) schemes – which results in too much
risk being taken by employers, while in Defined Contribution (DC)
schemes, too much risk is being taken by employees,” said
Richard Mulcany, principal consultant at Hewitt.
“Change has to come and we are equally supportive of either
permitting more risk sharing within DB schemes through conditional
indexation, or permitting more risk sharing between members of DC
schemes through Collective DC,” he added. “However,
there are clearly many variables for ongoing consideration, including
the interaction with other pension legislation within the UK and
EU – but my hope is that any problems arising can be overcome.”
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Pensions Age June 2008
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