Select committee: Work and Pensions Committee
Recommendation 16
Seventh Report - Defined benefit pensions with Liability Driven Investments
Published 23 Jun 2023
Paragraph 149
Addressed to Department for Work and Pensions
Work and Pensions Committee Defined benefit pensions with Liability Driven Investments All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
There are two fundamental concerns with the new funding regime. One is that the approach is not sufficient to allow open schemes to thrive. This is an issue to which we will return in our wider inquiry on defined benefit pension schemes. The second is that it will result in greater ‘herding’ in investment decisions. In light of the FPC’s recommendation for TPR to take account of financial stability, DWP and TPR should halt their existing plans for a new funding regime, at least until it has produced a full impact assessment for the proposals, including the impact on financial stability and on open DB schemes.
From: Work and Pensions Committee, Seventh Report - Defined benefit pensions with Liability Driven Investments (HC 826), paragraph 149, 23 June 2023
Government response
The government responded to the whole report on 20 November 2023 (deadline 23 August 2023).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government "welcomes the Committee's report" and sets out progress and proposals for future work on each recommendation, with some recommendations met through regulator monitoring and others left to later consideration.
- On investment consultants, the Government "welcomes" the recommendation to bring them within the FCA's regulatory perimeter, but commits only to take the Committee's views into account as it "assesses its next steps".
- On financial stability, the Government "accepts the FPC's recommendation" that TPR should incorporate financial stability considerations in its decision making and balance them with its objectives as a pensions regulator.
- On the Committee's call to halt the new funding regime, the Government does not say it will halt it. DWP plans to lay the draft regulations "in due course", accompanied by a full impact assessment.
- On disclosure requirements for LDI use, DWP "will consider, in light of TPR's findings, whether changes to disclosure requirements are appropriate". TPR's analysis of 2022 scheme data is to be produced "by the end of 2023".