A pragmatic new regime is needed for defined benefit (DB) surplus release, Association of Consulting Actuaries (ACA) chair, Stewart Hastie, has said, arguing that a new regulator code needs to follow "sooner rather than later" in order to drive behavioural change.

Speaking at the annual Chair’s Dinner, Hastie welcomed the government's recent announcements on collective defined contribution (CDC) and DB pensions, noting that more "interesting developments" are still expected later this year.

"It is an exciting time to be in ‘pensions’ and I see within our industry, a real commonality of purpose when it comes to making the case for action and supporting innovation. On more than one occasion, I have heard comments that pensions is a much more collaborative and friendly industry than others, despite the wide range of stakeholders and interest groups," he continued.

However, Hastie argued that more is still needed, in particular highlighting the need for a "pragmatic and successful new regime for DB surplus release".

"Along with many others, we have spent a great deal of effort making the case for greater flexibility that could support UK employers and support economic growth," he continued.

"Through our policy paper released in February, we set out how government might get the balance right between safeguarding members’ existing benefits whilst encouraging and enabling change on surplus release.

"In short, trustees need to remain at the heart of this but the detail, including a new regulator code, needs to follow sooner rather than later and support a pragmatic approach if we are to achieve the behavioural change. The 7-year wait for the [DB] Funding Code is not a good benchmark!"

This is not the only area where further clarity is needed, as Hastie stressed that the appeal for government intervention continues following last year's Virgin Media ruling.

"Last September I described this as like ‘GMP equalisation on steroids’ and for the many schemes potentially affected, this remains fairly accurate," he said.

"I’d like to thank colleagues from in particular the SPP and APL who have joined with us in helping DWP understand the issues and potential solutions. I remain optimistic that we will make progress before the end of this year, as without intervention, it would seriously undermine the success of a new regime for DB surpluses."

In addition to this, Hastie argued that, to support CDC solutions, other key initiatives should be "speedily" brought in.

"Most of these that we’ve been talking about for some time such as default retirement pathways, dealing with small pots, and VFM," he continued. "And then of course, following through on the second phase of the pensions review."

However, Hastie argued that, as well as reform, the industry also need predictability and stability.

"Longer term thinking is needed to enhance trust in employers, schemes, providers and ultimately savers to be able to step up and meet the challenges together," he argued.

“We urgently need a long-term vision on pensions tax, automatic enrolment thresholds and funding for adult social care. This will help build certainty and importantly trust."

Hastie added: “So, when calling for change and supporting government in developing policy, we should be confident that ours is a sector that is a major contributor to the single word that is driving this government – and that is GROWTH.

"We grow the economy through deploying our capital more efficiently. We grow the economy through facilitating greater investment in productive assets,

“And we grow the economy by helping address the retirement savings adequacy challenge.”

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