Tackling complexity, ensuring fair value and easing transferability are three areas that the pensions industry must focus on if defined ambition (DA) proposals are to be successful, according to Which? financial services chief advocate Doug Taylor.

Speaking at a Trades Union Congress (TUC) seminar this morning, Taylor pledged his support for Pension Minister Steve Webb’s defined ambition (DA) proposals, encouraging greater risk sharing between employer and employee, but nevertheless warned of the issues that need to be ironed out for it to be effective.

Taylor highlighted problems surrounding complexity and stated that defined ambition is likely to push in a variety of variants into the system whether it be DB-lite, or at the DC plus end of the scale.

The issue of fair value and the number of ways a defined ambition scheme can create a guarantee was also highlighted as an area to analyse.

Finally, Taylor emphasised that there could be complexities surrounding the issue of transferability. “If we create a lot of variants within DA, that have got different complexities around them, that will create a lot of frictional cost in transferring pots between employers with different defined ambition strategies,” he said.

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