Regulation without Reason: The Deleterious Effects of Government Regulation on Private Pension Provision

In this article, the history of regulation in pensions in the United Kingdom is analysed, in particular with respect to defined benefit occupational pension schemes. A framework of criteria for effective legislation is developed. The original prudent person rule provided a good framework for legislation, but most subsequent regulation that has been enacted does not meet our criteria. Recently regulation has increased the cost and risk of individual schemes and the systemic risk in the system as a whole. The article finds that, in totality, regulation has been disastrous for these schemes, contributing to their demise. The article concludes by briefly outlining how effective regulation might have developed to produce a flexible and resilient system.