The Association of Member Nominated Trustees (AMNT) has expressed its full backing of the decision of the Department for Work and Pensions to move forward with a consultation on discount rate smoothing, announced in yesterday’s statement by Chancellor George Osborne.
Janice Turner, co-chair of AMNT, said: “This has been one of the key campaigns run by the AMNT throughout the two years of its existence and is what long-suffering DB pension scheme trustees have been desperate to hear. The prolonged recession has left trustees and employers facing unprecedented circumstances with deficits so volatile that countless DB schemes have closed and, in some cases, even toppled their sponsor company into closure.
“It is very pleasing that Steve Webb has been the first Pensions Minister to grasp this particularly painful nettle, where others before would not. It is now important, however, that the process should not be dragged out as a stalling mechanism whilst more open DB schemes close. The AMNT will now be working very hard in the coming months to put forward and argue strongly for a responsible alternative to the current unworkable regulations.
Turner continued: “The result of this consultation could be that billions are wiped away from DB pension scheme deficits leaving companies better able to invest in their own businesses. It could be a lifeline for DB pension schemes and aid the recovery of the British economy. For this reason we hope that those thinking about scheme closure will seriously consider awaiting the results of this consultation before taking any permanent decisions on the future of their scheme.”
Updated AMNT press release.
My take on this is that it is estimated that the introduction of smoothing and other measures proposed could improve the funding position of defined benefit pensions schemes by 20-30%. So it is inconceivable that any pension fund should carry on with any plans for closures until the enquiry is concluded.