Broadstone has become the latest pension consultancy firm to express concern about the new DB funding code, being proposed by the Department of Work & Pensions.
In response to the DWP consultation, Broadstone says the draft rules will impact smaller schemes disproportionately.
It says it has “serious concerns” that strong employers with small schemes will face material additional costs as a result of the more stringent requirements.
Moreover, Broadstone comments that the rigid definition of significant maturity could undermine long-term planning with the “hard and fast rules” of the draft code failing to recognise the more volatile position of smaller schemes.
These concerns follow similar objections made by Aon, LCP, WTW and Hymans Roberston in recent weeks.
Broadstone head of policy David Brooks, Head of Policy at Broadstone, commented: “We appreciate the government’s commitment to reducing the risk profile of DB schemes.
“However, compelling schemes to adhere to the same strategy has risks in itself. We believe that the rigidity of the proposals are particularly worrying.
“We are particularly concerned about the consequences for smaller schemes.
“We are strongly calling for a more flexible, scheme-specific approach to help smaller schemes who are more likely to experience volatility around a set date without some additional consideration.”
Commenting on its proposed new regime a spokesperson for the DWP said: “Our intention is to have better – and clearer – funding standards, whilst retaining the strengths of a flexible, scheme-specific approach. It is neither ‘one size fits all’, nor about micro-managing schemes. Every scheme will be treated on its merits.
“Millions of people rely on defined benefit schemes. Our new measures will help ensure they are protected for the long-term.”
This is a consultation paper and it is understood that the government will look carefully at all industry responses.
