Hybrid pensions schemes –
those combining defined benefit (DB) and defined contribution (DC)
elements – often represent a serious risk to members. This warning
comes from the UK Pensions Regulator which has just completed a
study of 150 hybrid schemes.

“Our research indicates that
some schemes are so complex that even those accountable for running
them struggle to understand their workings,” said June Mulroy, the
Pensions Regulator’s executive director for DC scheme, governance
and administration.

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She added that in half of
cases studied, DB and DC assets were not held separately,
increasing the potential for errors in pension payments, or when
schemes wind up.

Specifically, the study found
that half of the schemes studied, DB and DC assets were mixed
together in the same bank account or investment fund, and in some
cases were not separately identifiable.

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