Documents to download

In December 2016, the Work and Pensions Select Committee published a report on , Defined Benefit pension schemes, making recommendations aimed at putting “incentive structures in place to make it more likely that [defined benefit] DB schemes would be sustainable and that employers will honour their responsibilities.” They included:

  • Empowering the Pensions Regulator (TPR) to impose punitive fines, intended to deter employers from avoiding their responsibilities;
  • Empowering trustees with the powers to represent the interests of scheme members – for example, by being able to demand timely information from employers or implement conditional indexation arrangements;
  • Enabling the Pensions Regulator to intervene earlier – with a shorter timetable for valuations, particularly for riskier schemes and recovery plans of ten years except in exceptional cases;
  • Facilitating scheme restructure in certain circumstances – for example, amending the barrier of imminent and inevitable insolvency for a Regulatory Apportionment Arrangement (RAA) to be allowed;
  • Making it mandatory to apply for clearance in some cases (with the size of the deficit relative to value of the company and the viability of the ongoing plan for supporting the plan as relevant criteria.
  •  

In February 2017, DWP published a Green Paper Defined Benefit pension schemes: security and sustainability. This set out the evidence about the key challenges facing DB pension schemes and highlighted options to improve confidence in the system.

In July 2017, the Government said it would publish a White Paper that would address commitments in its manifesto in relation to the “regulation and rules governing defined benefit private pensions.” The paper would also “consider innovative delivery structures, such as consolidation and measures to drive efficiency within the sector.” The Government said that while the sector was “broadly working as intended”, the White Paper would consider the “need to evolve and adapt the regulatory regime to improve security for members.”(HC Deb 13 July 2017 c19-20WS)

On 19 March 2018, the White Paper Protecting Defined Benefit Pension Schemes (Cm 9591) setting out its approach for the funding of the Defined Benefit system and supporting the Regulator’s ambition to be clearer, quicker and tougher:

For all schemes and businesses we are clarifying the rules and expectations, for example, through a clearer, enforceable Defined Benefit Funding Code, but otherwise not making fundamental changes to the existing system. For the small number of employers evading their obligations, we will put in place tougher, more proactive powers so that the Pensions Regulator can intervene more effectively to protect individuals. Finally, we will be consulting over the coming months on a framework for consolidation, offering industry the opportunity to innovate but ensuring there are robust safeguards in place so members’ benefits are well protected (Foreword).

Some of the issues are discussed in more detail in Library Briefing Paper SN-04368 The Pensions Regulator: powers to protect pension benefits (January 2018) and SN-04877 Defined benefit pension scheme funding (October 2017).


Documents to download

Related posts

  • Pensions: international comparisons

    A look at how UK pensions compare with those in other countries. The note compares the UK state pension with similar systems in Europe and goes on to look more broadly at the structural differences in the sources of pensioner income across economically advanced countries.

    Pensions: international comparisons
  • War widows’ pensions

    Looks at the change in the rules to allow all people in receipt of a War Widow(er)s' Pension in April 2015 to keep it for life (regardless of remarriage or cohabitation) and at the campaign for reinstatement of pensions already surrendered

    War widows’ pensions