Source · Select Committees · Work and Pensions Committee
Recommendation 3
3
Acknowledged
Paragraph: 35
Commit to ensuring Parliament receives full material details for informed judgment on legislation.
Conclusion
Plans for the new DB funding regime were forged in a different era when the vast majority of DB schemes were in deficit and amidst concern that employers were seeking to evade their responsibility to underfunded schemes. Despite significant changes since then—improved funding levels and what these mean for future policy—the fundamental principles underpinning the new regime are unchanged: schemes are expected to target a position of low dependency at the point of significant maturity. While we welcome the changes made by DWP and TPR to allow more flexibility in the investment approach, it is unclear what the overall effect will be. Schemes have not yet seen the final version of TPR’s Funding Code. It is unfortunate that Parliament has been asked to vote on the Regulations before this was published and stakeholders have had the opportunity to evaluate and comment on the full picture. In future, DWP should commit to ensuring that Parliament has the material details it needs to make an informed judgement on the legislation it is being asked to vote on.
Government Response Summary
The government supports the principle of providing Parliament with necessary details for informed decisions and remains committed to positive engagement. It notes the new DB funding code came into effect in September 2024 and will be reviewed within the next five years.
Paragraph Reference:
35
Government Response
Acknowledged
HM Government
Acknowledged
This Government supports the principle that Parliament should be provided with the details it needs to make a truly informed decision on legislation it is being asked to consider. We remain committed to positive engagement with Parliament on all appropriate matters. TPR’s DB funding code was laid Parliament in July 2024 and came into effect in September 2024. The code was well-received by pension schemes who welcomed the clarity and flexibility it provides. The roots of the current reforms were established under the previous Government at a time when the funding landscape looked very different. Nevertheless, this Government supports the principles of these reforms in seeking to make DB funding standards clearer and keeping members’ hard- earned pensions safe for the long term. TPR will be monitoring the effectiveness of the code through supervisory activity and data returns from pension schemes. DWP, alongside TPR, will also monitor how schemes’ funding and investment approaches develop in response to the new code and legislative framework. The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 will be reviewed within the next five years, and the code will be reviewed and revised where appropriate.