UK - Hymans Robertson has outlined its proposals for a "once-in-a-generation opportunity" for reform to public sector pensions in submissions made to Lord Hutton's pension review.

The company's head of public sector John Wright argued that reforms proposed now offered the opportunity to put public sector pensions on sustainable footing for decades, rather than years.

He said: "Public service pensions should not be levelled down to the current private sector DC model.

"Inadequate occupational pensions store up problems for the future - they lead to greater dependence on state benefits in the long term, pushing costs on to tax-payers."

Wright said public sector pensions should instead be a benchmark for affordable occupational pensions in the country, avoiding short-term fixes.

"There must be a focus on containing or reducing long-term balance sheet debt, and affordability has to be assessed using a consistent currency that recognises the true economic cost of pension promises," he said.

He added that more needed to be done to demonstrate the government's commitment to reducing balance sheet debt, in an effort to assure the bond market.

Wright said a step toward reducing government debt had already been taken by linking pensions to the consumer price index, rather than the retail price index.

Speaking of the move, which is estimated to have taken £100bn out of a £1trn bill, he added: "Much more needs to be made of the fact these steps are being taken."

In other news, the managing director of AJ Bell has called on the government to continue pursuing a simplified system for tax relief on pensions, as outlined in a recent HM Treasury discussion paper.

Billy Mackay said it was refreshing to be in a position where it felt like they were working with the government toward a framework that would promote future savings.

He said: "Fairness and simplicity needs to be at the core of the final solution. 

"We need to challenge the strength of the proposals under the banner of simplicity."

Mackay said there was an argument for reducing the annual allowance to £35,000, if this allowed the government to continue granting tax relief at the marginal rate.

"The new excess annual allowance tax charge for people who exceed the contribution allowance introduces added complexity without reason," he said.

"The current charge to tax at 40% acts as a deterrent and is simple."

Finally, Premier Foods has announced it intends to close its defined benefit (DB) schemes to new members from next year in an effort to combat a £431m deficit over several of its schemes.

The company behind bread brand Hovis and Bisto stock plans to open a defined contribution scheme (DC) for new members and offer existing DB scheme members a career-average pension.

In the company's half-year results, it said: "[Premier Foods] continues to work with the pension fund trustees to develop the investment and liability management strategy with the objective of making the deficit less volatile and to maintain a long-term deficit repayment schedule that balances the need to fund the deficit in a timely fashion with the need to do so in a way that is affordable."

The company last year agreed a payment plan with trustees that would see its pension deficit eliminated by 2022.
 

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