Private defined benefit closures ‘could lead to more pension flexibility’

Pensions must become more flexible in order to encourage investment in the future, according to one observer.

Dr Ros Altmann, an independent financial expert and investment banker by trade, predicted that a wave of defined benefit provision closures may mean that such schemes will have to adapt.

However, she said that at the moment they are locked away in a place where they cannot be touched by policymakers and reformers.

The expert’s comments came as a report by big four accountancy firm PricewaterhouseCoopers revealed that 94 per cent of employers are planning to reduce or close their current pension schemes.

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“If there is more flexibility – perhaps a lifetime savings account where at least some can be withdrawn if needed, then more people may contribute,” she indicated.

Furthermore, Dr Altmann argued that if private sector employees could no longer look forward to a final salary pension or defined benefits scheme, then it is highly unlikely that taxpayers will be supportive of increasing duties to fund the shortfall in provisions.

By Ross George