With the help of  a group of industry experts the National Association of Pension Funds (NAPF) has published a new essay examining what a 'defined ambition' (DA) pension might look like.

Contributors such as Steve Webb; NAPF chief executive Joanne Segars; PPF chief executive Alan Rubenstein; Shadow Minister for Pensions Gregg McClymont MP; and Lord Hutton of Furness, are among those who have contributed to the report analysing exactly what DA is and how it would function in the current market place.

The paper, called 'Defining Ambition: Views from the industry on achieving risk sharing', is the first in a series of thought-leadership pieces that the NAPF will publish in the coming months.

Aside from defining the idea, the essay, which was published as the NAPF is holding its annual conference in Liverpool, also deals with the type of regulatory framework needed to facilitate its creation.

Ever since the Pensions Minister proposed DA to the pensions world earlier this year, there has been widespread interest. A survey for the NAPF showed that over half of workers (55%) would choose to save into a pension with lower returns if they were guaranteed a minimum income in retirement.

Webb said: "In this increasingly uncertain world, it is clear that a majority of workers would value greater certainty about the likely level of their pension. That is why I am taking a look at all the possible options for delivering greater certainty, and I am pleased that my call for greater risk-sharing has been met with many positive responses. We will publish our ideas for further discussion later this year, as part of our plan to reinvigorate workplace pensions."

Darren Philp, NAPF's policy director, said: "The introduction of auto-enrolment and the decline of final salary defined benefit pensions are raising important questions about how we might do pensions differently.

"The defined ambition proposition is a good idea, which has found a strong level of support. But while many welcome the concept of sharing risk to deliver better outcomes for pension savers, there is a lot to do to create an environment where risk sharing schemes can flourish.

"This collection of thought pieces seeks to advance the debate further in this important area. We hope it makes a positive contribution to the Government's thinking as it develops its proposals for risk-sharing."

First published 18.10.2012
azeevalkink@wilmington.co.uk