Select committee: Work and Pensions Committee
Conclusion 5
Third Report - Defined benefit pension schemes
Published 26 Mar 2024
Paragraph 52
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)
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. DWP and TPR need to act urgently to ensure they do not inadvertently finish off what few open schemes remain by further increasing the risk aversion, even while the risks of default have reduced substantially. Open and continuing schemes need confidence that the additional flexibilities that have been promised will be reflected in the actual approach regulators take in future. To signal the change in approach needed for this, the objective to protect the PPF should be replaced with a new objective to protect future, as well as past, service benefits. TPR should work with the pensions industry on what the change would mean in practice and what capabilities it will need to deliver on it effectively.
From: Work and Pensions Committee, Third Report - Defined benefit pension schemes (HC 144), paragraph 52, 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."