New pension proposals will increase costs
Tue 26 Feb 2008
The pensions regulator's latest proposal will increase the cost of occupational pension schemes, according to an industry expert. Des Hamilton, technical director of The Pensions Advisory Service (TPAS), said the proposals were evidence of the regulator telling trustees to be more realistic when they calculate future costs. He said this was something, which "is likely to have the effect of making more employers say 'these are not the types of schemes that we want to be working with'". The regulator said that "scheme members living longer adds to the cost of pensions and it is right that schemes recognise this in their funding". With the period of pensionable time extending, pension funds are now looking at ways to generate enough income to cover their payouts. However, Mr Hamilton predicted some schemes were unlikely to continue: "I think that the long-term death knell for defined benefit schemes has already sounded."
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