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TPAS: Defined benefit schemes already on way out
28 February 2008 11:30
Defined benefit pensions were dwindling prior to recent calls for providers to be more realistic over their schemes' viability, the pensions Advisory Service (TPAS) has claimed.
Last week, The pensions Regulator warned that it would look especially carefully at firms whose funding of their occupational pension schemes were based on underestimations of or assumptions of no growth for members' life expectancies.
Yet TPAS technical director Des Hamilton rejected suggestions that this signalled the death of defined benefit pensions, arguing that it is simply a case of the regulator urging trustees to be more realistic in valuing their schemes.
He added, however, that the reason this is not a death knell for defined benefit schemes is that they were already in a state of terminal decline, noting that although they may still be flourishing in the public sector, they are virtually extinct among private companies.
Mr Hamilton also underlined the possible threat posed to occupational pensions per se, claiming that whereas employers have always offered these schemes in a bid to attract, retain and reward staff, the firms of today tend to have a less paternalistic attitude.
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