Select committee: Work and Pensions Committee
Conclusion 4
Third Report - Defined benefit pension schemes
Published 26 Mar 2024
Paragraph 45
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)
Open DB schemes help meet two important objectives: providing adequate incomes in retirement and investing in UK productive finance as they have greater capacity for this than closed schemes. Those responsible for running DB schemes have long expressed concerns that the Funding Code would force them to de-risk unnecessarily, increasing the costs to employers and resulting in their premature closure. While we welcome the additional flexibility in the revised Funding Regulations, it is essential Defined benefit pension schemes 55 that DWP and TPR work with open schemes to address the remaining concerns— particularly around the employer covenant horizon—and report back to us on how they have done so before the new Funding Code is laid before Parliament.
From: Work and Pensions Committee, Third Report - Defined benefit pension schemes (HC 144), paragraph 45, 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."