Here are a variety of views regarding the Budget 2013, which was announced by Chancellor George Osborne.

The new objective for The Pensions Regulator (TPR)

Michael O'Higgins, (TPR) chairman, said: "In light of the Government's proposal for a new objective to take account of the sustainable growth plans of the sponsoring employer, we will make the changes required, building on the 2004 funding regime, as part of a review of the Code of Practice for defined benefit (DB) funding that we will launch as soon as possible this year.

"In addition, we will shortly publish an annual funding statement which will set out our guidance to trustees in the context of current economic circumstances, including the flexibilities available to trustees and company sponsors in the current regime, particularly the freedom to choose the basis on which contribution levels and valuations are calculated.

"We will engage fully with stakeholders and the industry on both the revision of the Code of Practice and the next annual funding statement."

Joanne Segars, the National Association of Pension Funds (NAPF) chief executive, said: "We have long been calling for a new statutory objective for the Pensions Regulator to help secure the future of pensions, so we are pleased with today's announcement.

"We back the broader focus of the objective and look forward to seeing more detail. The new objective needs to strike the right balance between protecting savers' interests, helping good defined benefit pensions remain open, and ensuring pension regulation does not hinder investment and growth. We will be keeping a close eye on how the Regulator meets this new goal."

Segars added: "The requirement for the Regulator to allow use of the full flexibility in the current funding regime is a sensible approach and is in line with what pension funds want. This should give businesses running final salary pensions some much-needed relief from the effects of low gilt yields and quantitative easing."

Kevin Wesbroom, Aon Hewitt partner, said: "We welcome the decision to give the Pension Regulator a new objective – but more than ever the devil is in the detail on this case."

Wesbroom added: The new objective for the Regulator needs to be a strong, clearly visible signal that those parties can and should exercise their judgment, without fear of regulatory rebuke. The guidance from the Regulator should enable these parties not to be unduly anchored by past methods and assumptions where they believe circumstances have changed. Those changed circumstances can lead to a revised set of technical provisions and ultimately revised contributions for each specific scheme."

"We should be moving away from a system of affordability of pension contributions towards a system of reasonableness of contributions, with a regulatory framework that explicitly supports employers as well as members".

Peter McPherson, Capita Employee Benefits senior technical advisor, said: "In a surprise move, the Pensions Regulator will be given a new statutory objective to take into account the growth prospects of employers when considering funding recovery plans. This follows a recent consultation on this issue and the possibility of introducing smoothing the valuations. Our view is that this was not explicitly required because the Pensions Regulator already did this. We support the decision not to take smoothing any further, but are of the view that the statutory funding regime requires more flexibility."

Kevin Legrand, Buck Consultants head of pensions policy, said: "Although the Regulator currently does in many cases take account of the position of employers when reviewing deficit funding plans, the existence of an obligation to do so will ensure that it is considered, consistent and at the same level of importance as the other obligations. Buck has been arguing for this for some time and we support the Chancellor on this."

John Cridland, CBI director general, said: "Addressing the chilling effect of artificially-inflated pension scheme deficits on business investment is the right step.A new statutory growth objective will ensure the Pensions Regulator recognises the need to protect the financial strength of the sponsoring employer, who will then be able to stand behind their scheme more effectively.

"The best form of protection for employee's benefits, and the economy as a whole, is a solvent and thriving employer."

John Broome Saunders, Broadstone actuarial director, believes this will lead to lower overall deficit funding rates. He said: "This marks a clear shift in the balance of power. The majority of DB scheme sponsors will want to argue that sustainable growth requires greater investment in their business, and thus lower contributions to fund pension deficits. Larger deficits mean less security for members, and a heightened chance that schemes end up cutting benefits and being dumped in the PPF."


The new flat-rate state pension

Segars, from NAPF, said: "We strongly welcome proposals for a new, single tier state pension. But the Government has to ensure that the changes are implemented in a way that does not damage company pension schemes. This is a very tight timeframe and we question whether it can be delivered. Schemes need flexibility and time to adapt.

"If the Government gets it wrong then it risks sparking a fresh round of final salary pension closures in the private sector. Businesses that get caught on the wrong side of these changes will lose a significant rebate from the end of contracting out, and this extra cost may prompt them to close their pensions altogether.

"We have waited many years for these reforms. An overhaul of the state pension is long overdue and a simpler, fairer system helps set a clear foundation on which people can build their own savings. It would be a shame if mistakes were made in a rush to implement the changes."

McPherson from Capita said: "The Chancellor confirmed what he said over the weekend – that the state pension would be increased to a flat rate of £144 per week from 2016. While this is welcome news for imminent pensioners, it is an ambitious timetable and we hope that government is able to meet it. Defined benefit schemes would, of course, be affected earlier as defined benefit contracting out would end at the same time."

James Patten, head of benefit design at Aon Hewitt, said: "Whilst we welcome acceleration of the simplification of the state pension system, we remain concerned that the reforms will have implications which do not seem to be aligned to the government's objectives. In particular, those workers that had always been in contracted-out DB plans will generally fare relatively better under the new system than those that had always been contracted-in, including many in lower cost DC plans."

Charles Cowling, JLT director, said: "there remains a question mark over the millions of people contracted out of the current State pension. It is unclear whether the apparent outcome for different groups is a matter of accident or design and, if intended, what the public policy reasons are for the resultant treatment.

"This is though just a small part of a very welcome big picture. We applaud the simplicity and sustainability of the new State pension and commend the decision to bring forward the timetable for change. This will further support the workplace pension reforms that started to take effect last year and which have, so far, been very successful."


Change in monetary policy committee remit

Richard Stevens, Threadneedle fixed income fund manager, said: "The change to the remit of the MPC is not as radical as some had feared. Primacy of inflation target was maintained but the MPC will need to be more explicit as to the trade offs that are being made between achieving the 2% inflation target and the Government's growth objective. Additionally the MPC is to consider following the approach used by the Fed in the US of forward rate guidance and the potential use of intermediate thresholds i.e. economic indicators."

Tapan Datta, Aon Hewitt head of global asset allocation, said: "The change to the Bank of England's approach to managing inflation discussed in the budget statement is worded in fairly general terms. There seems to be some suggestion that the Bank of England might move to giving forward interest rate guidance, which could imply a US Federal Reserve-style commitment to keeping low interest rates unchanged for a defined time period. The full details of these new arrangements may await Mark Carney's arrival at the Bank in July, but there is little in today's Budget to suggest any major change towards more stimulatory monetary policy as such. Recent sterling wobbles and rising inflation concerns in gilt markets may have played a part in the choosing of the Chancellor's words today."

Infrastructure

CBI's Cridland said: "The CBI was clear this Budget needed to deliver a good dose of business and consumer confidence, while being necessarily fiscally neutral.

"We're particularly pleased our call for a focus on the short-term boost of housing has been heeded, alongside an increase in longer-term big ticket infrastructure spending."

He added: "By shifting £6bn to housing and infrastructure, the Government has sowed the seeds for growth and jobs."

Smoothing

Aon Hewitt's Wesbroom said: "Aon Hewitt's research and analysis showed that smoothing was not the answer for the UK pension system. We had argued that what was needed was the exercise of judgment by all parties – trustees, employers and advisers."

Corporate tax

Capita's McPherson said: "The reduction in the rate of corporation tax – to be funded by an increase in the bank levy – to just 20p was further good news. This change will not only help firms of all sizes to invest in growth and employment but it should also help absorb some of the inevitable costs attached to positive changes like auto enrolment. The personal allowance will be increased to £10,000 from next year, earlier than expected, and we hope that this will also be accompanied by a revision of the earnings trigger for automatic enrolment into pensions."


General investment

Stevens from Threadneedle said: "For gilt investors the Budget is probably marginally negative, owing to the higher peak in debt /GDP and the reduced probability of further quantitative easing, although the volume of gilt issuance in the coming fiscal year came out below market expectations at £151bn - with more issuance being taken up by T.Bill issuance."


First published 20.03.2013

monique_simpson@wilmington.co.uk