Government calls for new types of pension schemes

retired pension planning

The government is exploring new types of pension schemes that would give more security to retiring workers.

Minister for Pensions, Steve Webb, says the government is looking at several options that might become, what he terms, a “defined ambition plan”.

The idea is to replace final-salary pensions, which have become too expensive for many private firms reports The BBC.

The minister has been speaking to companies about creating a new framework for pension schemes.

In an interview on the BBC Radio 4 Today programme, Mr Webb said: “Firms would like to offer their employees some sort of certainty but without all the costs and burden they already face.”

Shell recently become the last of the FTSE 100 companies to close its final salary scheme to new employees.

Ron Altman Director General of Saga said “We are pretty clear that employers are going to be very nervous about anything that involves guarantees,” Malcolm Small of the Institute of Directors told the BBC.

“It is going to be pretty unattractive to employers.”

Final-salary schemes are popular as they deliver a guaranteed income in retirement that is linked to inflation.

But as people are now living longer, companies have seen the costs of those schemes soar.

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