27/02/2017
The security and sustainability of defined benefit pension schemes and possible changes to the relevant powers of the Pensions Regulator are reviewed in a Green Paper published by the Dept for Works & Pensions.
‘Defined benefit pension schemes: security and sustainability’ (responses by 14 May) seeks to involve employers, the pensions industry and consumers in a debate that will cover key issues such as
Around 11m members rely on defined benefit schemes – many of which are known as ‘final salary pensions’ – for all or part of their retirement income. They hold assets worth around £1.5 trillion, making them a central pillar of the UK pensions system.
With increased life expectancy and changes to working patterns and the economy, they are operating in different circumstances to those for which they were originally developed. While there is no evidence of any systemic issues, recent high profile cases have also highlighted the inherent risks in them.
The ultimate aims of the consultation are to help ensure
- defined benefit pensions remain sustainable
- the right protections are in place for members
- the needs and aspirations of sponsoring employers, members, the Pension Protection Fund and the wider economy are all catered for fairly
The Green Paper has been broadly welcomed by business, with a CBI spokesperson calling it a “sensible start to what is a complex conversation about how we both boost growth and honour pensions promises”.