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Select Committee · Work and Pensions Committee

Defined benefit pension schemes

Status: Closed Opened: 16 Mar 2023 Closed: 5 May 2024 9 recommendations 14 conclusions 1 report

Defined benefit (DB) pension schemes promise to pay pension benefits based on salary and length of service. There are over 5,100 UK private sector DB schemes, with around £1.4 trillion in assets. DB schemes are in decline in the private sector. The number of private sector employees still accruing new DB benefits reduced from 3.5 … Show more

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Reports

1 report
Title HC No. Published Items Response
Third Report - Defined benefit pension schemes HC 144 26 Mar 2024 23 Responded

Recommendations & Conclusions

4 items
5 Conclusion Third Report - Defined benefit pension … Rejected

Replace TPR's PPF protection objective with protecting future and past pension service benefits.

TPR’s approach to scheme funding has been driven by its objective to protect the PPF. We agree with those who told us that the objective now looks redundant, given the PPF has £12 billion in reserves. Two decades of regulatory policy caution have almost entirely destroyed the UK’s DB system. … Read more

Government response AI summary
The government rejects the recommendation to change TPR's objective, stating it does not believe the PPF objective is a key factor in employer decision-making and that an independent review did not recommend this change. It will formally respond to the 'Options for Defined Benefit Schemes' …
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Department for Work and Pensions
8 Conclusion Third Report - Defined benefit pension … Rejected

Consider funding regime changes to increase trustee confidence in taking appropriate investment risk.

We remain to be convinced that the PPF underpin would be an effective incentive to trustees to consider increasing their investment risk. DWP and TPR should consider whether there are changes to the funding regime that could give trustees confidence to take appropriate investment risk. (Paragraph 74) 56 Defined benefit … Read more

Government response AI summary
The government states that trustees already have significant flexibility for investment risk within the current regime and is not persuaded that merely allowing more risk would be sufficient. It highlights the 'Options for Defined Benefit schemes' consultation, exploring changing incentives, and commits to respond later …
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Department for Work and Pensions
22 Recommendation Third Report - Defined benefit pension … Rejected

Legislate urgently to provide indexation on FAS compensation for pre-1997 rights, funded by taxpayer

Financial Assistance Scheme (FAS) members are likely to have more of their service before 1997, so are particularly likely to be affected by non-indexation of pre-1997 benefits. Any improvements for PPF members should also apply to FAS members. Given the age of many FAS members, the Government should legislate as … Read more

Government response AI summary
The government states it is considering how to address the lack of pre-1997 indexation for FAS members. However, it explicitly rejects awarding interest on arrears due to no legal basis and rejects removing the FAS compensation cap due to significant cost implications for the Exchequer.
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Department for Work and Pensions
23 Recommendation Third Report - Defined benefit pension … Rejected

Ensure adequate independent redress mechanism for AEAT pension scheme members' complaints

We support the recommendation of the Public Accounts Committee that the Government should “ensure that members’ complaints about the AEAT pension case can be independently reviewed, for example by a relevant ombudsman.” We agree with the Pensions Minister that it is important for a sense of justice and fairness that … Read more

Government response AI summary
The government rejects the recommendation, stating that the AEAT case has been extensively investigated over the last ten years by various bodies, and there are no plans to offer specific redress to AEAT members.
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Department for Work and Pensions

Oral evidence sessions

6 sessions
Date Witnesses
10 Jan 2024 Bim Afolami · HM Treasury, Fiona Frobisher · The Pensions Regulator, Katie Farrington · Department for Work and Pensions, Laura Webster · HM Treasury, Neil Couling · Department for Work and Pensions, Paul Maynard · Department for Work and Pensions, Peter Schofield · Department for Work and Pensions View ↗
29 Nov 2023 Louise Davey · The Pensions Regulator, Nausicaa Delfas · Financial Ombudsmen Service, Neil Bull · The Pensions Regulator View ↗
8 Nov 2023 Barry Kenneth · Pension Protection Fund, Neil Walsh · Prospect, Oliver Morley · Money and Pensions Service, Richard Nicholl · Pensions Action Group, Roger Sainsbury · Deprived Pensioners Association, Sara Protheroe · Pension Protection Fund, Terry Monk · Pensions Action Group View ↗
18 Oct 2023 David Carson · Hewlett Packard Pension Association (HPPA), Harus Rai · Capital Cranfield, Janice Turner · Association of Member Nominated Trustees, Leonard Bowman · Hymans Robertson, Nick Coleman · BP Pensioner Group, Robert Smith · Royal Ordnance Pensioners Association, Steve Hitchiner · Society of Pension Professionals View ↗
6 Sep 2023 Adam Saron, Brian Denyer · Abrdn, Luke Webster · The Pension Superfund, Serkan Bektas · Insight Investment, Simon True · Clara-Pensions Limited, Tracy Blackwell · Pension Insurance Corporation plc, Yvonne Braun · ABI View ↗
21 Jun 2023 Dr Con Keating · Brighton Rock Group, Joe Dabrowski · Pension and Lifetime Savings Association, Leah Evans · Institute and Faculty of Actuaries, Mr Derek Benstead · First Actuarial LLP, Mr John Ralfe, Mr Martin Hunter · Railpen, Professor Iain Clacher · University of Leeds, Sir Steve Webb · Lane, Clark & Peacock View ↗

Who gave evidence

39 witnesses
WitnessOrganisationSessions
Adam Saron — 1
Barry Kenneth · Chief Investment Officer Pension Protection Fund 1
Bim Afolami · Economic Secretary to the Treasury HM Treasury 1
Brian Denyer · Senior Solutions Director – Pensions Abrdn 1
David Carson · Member of Steering Committee Hewlett Packard Pension Association (HPPA) 1
Dr Con Keating Brighton Rock Group 1
Fiona Frobisher · Head of Policy The Pensions Regulator 1
Harus Rai · Managing Director Capital Cranfield 1
Janice Turner · Founding co-chair Association of Member Nominated Trustees 1
Joe Dabrowski · Deputy Director Pension and Lifetime Savings Association 1
Katie Farrington · Director General, Disability, Health and Pensions Department for Work and Pensions 1
Laura Webster · Director of Personal Tax, Welfare and Pensions HM Treasury 1
Leah Evans · Chair of Pensions Board Institute and Faculty of Actuaries 1
Leonard Bowman · Partner and Head of Corporate DB Endgame Strategy Hymans Robertson 1
Louise Davey · Interim Director of Regulatory Policy, Analysis a… The Pensions Regulator 1
Luke Webster · CEO The Pension Superfund 1
Mr Derek Benstead · Senior Consultant First Actuarial LLP 1
Mr John Ralfe — 1
Mr Martin Hunter · Head of Integrated Funding Railpen 1
Nausicaa Delfas · Interim Chief Executive and Chief Ombudsman Financial Ombudsmen Service 1
Neil Bull · Head of Investment The Pensions Regulator 1
Neil Couling · Director General Change and Resilience, and Unive… Department for Work and Pensions 1
Neil Walsh · Pensions Officer Prospect 1
Nick Coleman · Member BP Pensioner Group 1
Oliver Morley · Chief Executive Officer Money and Pensions Service 1
Paul Maynard · Minister for Pensions Department for Work and Pensions 1
Peter Schofield · Permanent Secretary Department for Work and Pensions 1
Professor Iain Clacher · Professor of Pensions & Finance and Director, Cen… University of Leeds 1
Richard Nicholl · member of the Executive Committee Pensions Action Group 1
Robert Smith · Member of Council Royal Ordnance Pensioners Association 1
Roger Sainsbury · Founder Deprived Pensioners Association 1
Sara Protheroe · Chief Customer Officer Pension Protection Fund 1
Serkan Bektas · Head of Client Solutions Group Insight Investment 1
Simon True · CEO Clara-Pensions Limited 1
Sir Steve Webb · Partner Lane, Clark & Peacock 1
Steve Hitchiner · President Society of Pension Professionals 1
Terry Monk · Member of the Executive Committee Pensions Action Group 1
Tracy Blackwell · CEO Pension Insurance Corporation plc 1
Yvonne Braun · Director of Policy, Long-Term Savings, Health and… ABI 1

Correspondence

15 letters
DateDirectionTitle
4 Dec 2024 — Statement from the Office of National Statistics (ONS), the Pensions Regulator …
13 Mar 2024 — Correspondence with The Pensions Regulator relating to the impact on Defined be…
6 Mar 2024 — Correspondence with the Minister for Pensions relating to Defined Benefit pensi…
7 Feb 2024 — Correspondence from TPR relating to Defined Benefit pension schemes with Liabil…
31 Jan 2024 — Correspondence with Economic Secretary to the Treasury relating to Defined bene…
24 Jan 2024 — Correspondence with the Economic Secretary to the Treasury relating to Defined …
10 Jan 2024 — Correspondence with the Minister for Pensions relating to meeting with the Pens…
10 Jan 2024 — Correspondence with the Office for National Statistics relating to Defined bene…
10 Jan 2024 — Correspondence with the Minister for Pensions relating to Proposed Scheme Fundi…
13 Dec 2023 — Correspondence with the Pension Protection Fund relating to Defined benefit pen…
29 Nov 2023 — Correspondence with Pension Protection Fund relating to Defined benefit pension…
8 Nov 2023 — Correspondence from Clara-Pensions relating to defined benefit pension schemes
8 Nov 2023 — Correspondence with the Pension Protection Fund relating to Pension Protection …
25 Oct 2023 — Correspondence with the Pension Protection Fund relating to defined benefit pen…
18 Oct 2023 — Correspondence with the Prudential Regulation Authority relating to Defined ben…