Source · Select Committees · Work and Pensions Committee
Third Report - Defined benefit pension schemes
Work and Pensions Committee
HC 144
Published 26 March 2024
Recommendations
22
Rejected
Para 161
Legislate urgently to provide indexation on FAS compensation for pre-1997 rights, funded by taxpayer
Recommendation
Financial Assistance Scheme (FAS) members are likely to have more of their service before 1997, so are particularly likely to be affected by non-indexation of pre-1997 benefits. Any improvements for PPF members should also apply to FAS members. Given the …
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Government Response Summary
The government states it is considering how to address the lack of pre-1997 indexation for FAS members. However, it explicitly rejects awarding interest on arrears due to no legal basis and rejects removing the FAS compensation cap due to significant cost implications for the Exchequer.
Department for Work and Pensions
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23
Rejected
Ensure adequate independent redress mechanism for AEAT pension scheme members' complaints
Recommendation
We support the recommendation of the Public Accounts Committee that the Government should “ensure that members’ complaints about the AEAT pension case can be independently reviewed, for example by a relevant ombudsman.” We agree with the Pensions Minister that it …
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Government Response Summary
The government rejects the recommendation, stating that the AEAT case has been extensively investigated over the last ten years by various bodies, and there are no plans to offer specific redress to AEAT members.
Department for Work and Pensions
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Conclusions (2)
5
Conclusion
Rejected
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. …
Government Response Summary
The government rejects the recommendation to change TPR's objective, stating it does not believe the PPF objective is a key factor in employer decision-making and that an independent review did not recommend this change. It will formally respond to the 'Options for Defined Benefit Schemes' consultation in the Spring.
8
Conclusion
Rejected
We remain to be convinced that the PPF underpin would be an effective incentive to trustees to consider increasing their investment risk. DWP and TPR should consider whether there are changes to the funding regime that could give trustees confidence to take appropriate investment risk. (Paragraph 74) 56 Defined benefit …
Government Response Summary
The government states that trustees already have significant flexibility for investment risk within the current regime and is not persuaded that merely allowing more risk would be sufficient. It highlights the 'Options for Defined Benefit schemes' consultation, exploring changing incentives, and commits to respond later this year.