Pension Schemes Bill: New Risk Sharing Models

Last November we reported on the Government's proposals for defined ambition pension schemes. A somewhat watered-down version of those proposals is contained in the Pension Schemes Bill (the Bill) which is currently working its way through the parliamentary process.

The Bill introduces three new categories of pension scheme:

• Defined benefit (DB) scheme – where there is a "full pensions promise" of a pension payable for life based on a fixed retirement age.
• Shared risk scheme – where there is a "pensions promise" in respect of some benefits but it is not a defined benefit scheme.
• Defined contribution (DC) scheme – where there is no pensions promise about the level of benefit.