Affordable DB rendered impossible by regulations

Holden’s comments come in response to comments by Investment Management Association members that society was "sleepwalking towards the death of DB schemes" (PP, August 7).

The IMA said it was particularly concerned over proposed changes to the discount rate used to report pension liabilities – which it said would have "substantial" public policy consequences.

Holden said: "The increased focus on DC and the backcloth of regulation is making it impossible for companies to develop their own schemes for the benefit of their company and employees, schemes that they and their employees can afford."

Aegon head of pensions development Rachel Vahey agreed. She said: "DB is definitely in a down phase. The challenge is the unknown risks such as longevity and what that means for companies going forward.

"The industry has come up with innovative ways to tackle these challenges such as the emergence of DC and buyouts. But the closure of DB schemes is regrettable as employers now share in the risk. Increased longevity and increased regulation will continue to tackle the remaining DB schemes."

But Vahey said it was important for the industry to help employers meet the challenges of DB in order to encourage them to continue offering these types of pension.

She said: "We don’t want employers to walk away from pensions all together."