Select committee: Work and Pensions Committee
Conclusion 3
Third Report - Defined benefit pension schemes
Published 26 Mar 2024
Paragraph 35
Addressed to Department for Work and Pensions
Work and Pensions Committee Defined benefit pension schemes All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
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.
From: Work and Pensions Committee, Third Report - Defined benefit pension schemes (HC 144), paragraph 35, 26 March 2024
Government response
The government responded to the whole report on 30 April 2025 (deadline 26 May 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government says it has "addressed all of the Committee's recommendations", supporting some DB reforms and committing to consult or respond on others, while declining to make certain changes, such as replacing TPR's PPF objective or offering specific redress to AEAT members.
- On surplus, the government committed on 28 January 2025 to give trustees and sponsoring employers the flexibility to use DB surplus, and says it "will respond formally" to the 'Options for Defined Benefit Schemes' consultation "in the Spring".
- It agrees it is important that regulation does not make schemes too risk averse, but says "we do not believe that TPR's PPF objective is a key factor in employer decision-making", and the review it cites "did not recommend changing this objective".
- On the PPF levy, it announced on 30 January 2025 that it "will consider" giving the PPF Board greater flexibility to adjust the levy. On pre-1997 indexation for PPF and FAS members, it says Ministers "continue to take advice on options" and that it "will provide further detail in due course".
- On governance, it intends to run a public consultation "later this year", including on accreditation and support for lay trustees, and says it is introducing a Superfund authorisation framework in the forthcoming Pension Schemes Bill. On the AEAT scheme it states: "There are no plans to offer specific redress to AEAT members."