The measures have been produced alongside a warning that 52% of defined benefit pension schemes (around 1,000 in total) currently open to new members could close as a result of the current economic crisis.
The NAPF proposals that offer the quickest wins are the issuance of long-dated gilts, greater freedom in setting scheme rules – particularly on indexation and retirement ages; longer periods to make good liabilities and the government to become the ultimate guarantor of the Pension Protection Fund (PPF).
Other recommendations include the government, regulators and pensions industry working together to mitigate the costs of pension provision and a government/industry campaign on the importance of pension saving.
Joanne Segars, chief executive at the NAPF, said: “These exceptional times call for exceptional measures and new thinking. We have seen bold action from the government in response to the crisis in other key areas and similar action is now needed for the UK’s pension schemes.”
Ros Altmann, independent pensions adviser, picked out the issuance of government gilts (at least 30 years in duration and offering limited price indexation), the easing of recovery periods for deficits, and the government’s becoming a guarantor of the PPF as the key issues.
“It is inevitable that the government will listen if the regulator sees examples of companies likely to go out of business if they have to fund pension contributions for recovery plans.
“The regulator will, I am sure with government blessing, tell trustees that they can give the company more time. I do not think the government would want headlines of pension schemes pushing companies into insolvency.”
Commenting on the NAPF’s research, Neil Carberry, head of pensions at the Confederation of British Industry, said:
“Firms are doing what they can to keep schemes going, but the government should do its part. It could ensure firms have more time to fund deficits, act as a guarantor to the PPF and restore the incentive framework for firms to keep these schemes open.”
