Hybrid pension plans: UK and international experience
This research report is one of three projects commissioned by the Department for Work & Pensions (DWP) into hybrid or risk sharing pension plans. The main objective of the research is “to increase the knowledge of risk sharing and hybrid pension plans compared to traditional final salary and pure defined contribution plans; and to promote discussion and better understanding of these within Government and the wider pensions world”.
The detailed terms of reference for this project were as follows:
• A structured descriptive account of the various types of hybrid plans that exist in the UK and other countries, with particular reference to the risk allocation and incentive effects around these schemes.
• Finding out the conditions that led to the adoption of these arrangements and their overall perception by firms and workers. In practice, what are their perceived advantages and disadvantages for employers and employees?
• An account of the regulatory and tax environments within which such arrangements operate, and how this has affected their design.
• The potential implications of the above findings for the UK, and an assessment of how hybrid schemes may develop in future in the UK.