United Kingdom


  • Service: Tax, Pensions
  • Type: Press release
  • Date: 07/11/2013

Defined Ambition Pensions: “A new landscape to explore” says KPMG 


Commenting on the consultation document on workplace pensions issued today by the Department for Work and Pensions, KPMG Pensions Partner, Mike Smedley, said:


“Government has got the message that employers are not going back to traditional defined benefit pensions in a hurry.  So it’s welcome that these proposals provide a new landscape for the industry to explore.


“Today’s consultation document is a positive step forward.  At present the pension landscape is on a seemingly one-way trip from defined benefit to defined contribution.  The alternative models suggested are surprisingly novel and could benefit both employees and employers who want to provide a better deal for their staff.


“On the defined benefit (DB) side there is flexibility that may extend the lifespan of some DB plans, and in the long run even encourage new ones.  On the DC side there is strong encouragement for the industry to develop different and better products for individuals – adding to the recent pronouncements on keeping pension charges down.


“And then we have the ‘third way’ possibilities with a mix of guaranteed and targeted pension elements – coined ‘Defined Ambition’ by the Pensions Minister, and which have more than a passing resemblance to the Danish and Dutch models.


“There will be more work needed to test whether all these models are workable, and devil in the detail to come, but the paper is a brave step in the right direction.”

“The document is very focussed on better outcomes for members – more certainty than conventional DC plans and ultimately better pensions.  The paper recognises that companies are voluntarily providing pensions beyond the statutory minimum, so government have to make alternatives look palatable for employers.


“The thrust of the paper is that providing cast iron guarantees to individuals is very expensive.  But by providing slightly more flexible promises – and pooling the risks – pension savings can go further and deliver better pensions to people.  For example, if pension indexation is not wholly guaranteed then pension assets can be put to work and hopefully deliver better increases than the individual could otherwise afford.  This is an appealing concept and is a way of helping the average member get the most out of their pension savings.


“Some will undoubtedly criticise the proposals and whether they will have a real impact.  But we believe there are many employers who want to provide the best deal they can, and will seriously consider new options that do not add to their own risk.  A better pension scheme may help them differentiate to attract and retain the best staff.”


 David Fairs, Pensions Partner at KPMG in the UK, who was the DB sub-group chair and a member of the industry working group on the DWP consultation, said:


“I think Companies will be pleasantly surprised by the boldness of the ideas – Companies will need to work with employees and Unions to design arrangements that provide better outcomes for members at a cost and risk that companies are prepared to embrace.”





For further information please contact:


Margot Cowhig, KPMG Corporate Communications

Tel:  0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk


KPMG Press Office: 0207 694 8773


Notes to editors.


About KPMG



KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  KPMG International provides no client services.


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