Defined benefit pension schemes

Work and Pensions Committee Closed Inquiry
Opened: 16 Mar 2023 Closed: 5 May 2024 Parliament page
Defined benefit (DB) pension schemes promise to pay pension benefits based on salary and length of service. There are over 5,100 UK private sector DB schemes, with around £1.4 trillion in assets. DB schemes are in decline in the private sector. The number of private sector employees still accruing new … Read more
9 Recommendations
14 Conclusions
1 Report
6 Oral sessions
15 Letters
6 Events
Activity timeline 29 events
30 Apr
2025
Report published
4 Dec
2024
Correspondence
26 Mar
2024
Report published
13 Mar
2024
Correspondence
6 Mar
2024
Correspondence
7 Feb
2024
Correspondence
31 Jan
2024
Correspondence
24 Jan
2024
Correspondence
10 Jan
2024
Oral evidence
10 Jan
2024
Correspondence
10 Jan
2024
Correspondence
10 Jan
2024
Correspondence
Oral evidence sessions 6 sessions
10 Jan 2024
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Work and Pensions Committee
Bim Afolami · HM Treasury Fiona Frobisher · The Pensions Regulator Katie Farrington · Department for Work and Pensions Laura Webster · HM Treasury Neil Couling · Department for Work and Pensions Paul Maynard · Department for Work and Pensions Peter Schofield · Department for Work and Pensions
29 Nov 2023
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Work and Pensions Committee
Louise Davey · The Pensions Regulator Nausicaa Delfas · Financial Ombudsmen Service Neil Bull · The Pensions Regulator
8 Nov 2023
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Work and Pensions Committee
Barry Kenneth · Pension Protection Fund Neil Walsh · Prospect Oliver Morley · Money and Pensions Service Richard Nicholl · Pensions Action Group Roger Sainsbury · Deprived Pensioners Association Sara Protheroe · Pension Protection Fund Terry Monk · Pensions Action Group
18 Oct 2023
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Work and Pensions Committee
David Carson · Hewlett Packard Pension Association (HPPA) Harus Rai · Capital Cranfield Janice Turner · Association of Member Nominated Trustees Leonard Bowman · Hymans Robertson Nick Coleman · BP Pensioner Group Robert Smith · Royal Ordnance Pensioners Association Steve Hitchiner · Society of Pension Professionals
6 Sep 2023
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Work and Pensions Committee
Adam Saron Brian Denyer · Abrdn Luke Webster · The Pension Superfund Serkan Bektas · Insight Investment Simon True · Clara-Pensions Limited Tracy Blackwell · Pension Insurance Corporation plc Yvonne Braun · ABI
21 Jun 2023
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Work and Pensions Committee
Dr Con Keating · Brighton Rock Group Joe Dabrowski · Pension and Lifetime Savings Association Leah Evans · Institute and Faculty of Actuaries Mr Derek Benstead · First Actuarial LLP Mr John Ralfe Mr Martin Hunter · Railpen Professor Iain Clacher · University of Leeds Sir Steve Webb · Lane, Clark & Peacock
Title HC No. Published Items Response
Third Report - Defined benefit pension schemes HC 144 26 Mar 2024 23 Responded
Recommendations & Conclusions
9 results
Clear
2 Recommendation Acknowledged
Third Report - Defined benefit pen…
Set out future plans to promote retirement income adequacy, especially for open DB schemes.
There is sufficient evidence of improvement in the funding position of DB schemes to justify a new policy approach. However, it is imperative that there is no return to a world of deficits. Policy changes therefore need careful thought so … Read more
Government Response
The government highlights existing measures like the State Pension and automatic enrolment for retirement income adequacy. It states that the second phase of the landmark Pensions Review, announced in July 2024, will explore longer-term changes for security in retirement.
Department for Work and Pensions
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3 Conclusion Acknowledged
Third Report - Defined benefit pen…
Commit to ensuring Parliament receives full material details for informed judgment on legislation.
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 … Read more
Government Response
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.
Department for Work and Pensions
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7 Conclusion Acknowledged
Third Report - Defined benefit pen…
Conduct an assessment of the regulatory framework for safe member benefits before surplus extraction.
We note the further consultation launched in February on options to support DB schemes. Given that the aim of the funding regime is for schemes to be well-funded when they are significantly mature, some will be in surplus. We agree … Read more
Government Response
The government states that DWP is actively assessing the regulatory and governance framework and will continue to engage with TPR and stakeholders as it develops policy on surplus flexibilities. On January 28, 2025, it committed to giving trustees and sponsoring employers flexibility to use DB surplus.
Department for Work and Pensions
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12 Conclusion Acknowledged
Third Report - Defined benefit pen…
Introduce measures to improve sole trustee accountability and member involvement in appointments
The use of sole trustees is increasing. While they can bring knowledge and expertise, there is the potential for conflicts of interest. We are concerned that employers often have a unilateral power to appoint sole trustees in the place of … Read more
Government Response
The government acknowledged concerns regarding sole trustees and existing safeguards, committing to consult on what, if any, further action might be needed in the future, rather than introducing specific measures or member involvement now.
Department for Work and Pensions
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14 Recommendation Acknowledged
Third Report - Defined benefit pen…
Set out plans to ensure every trustee board has at least one accredited member
Member-nominated trustees play a vital role in representing the interests of scheme members and providing a link to the workforce. As part of its planned engagement with stakeholders, DWP should explore ways to support lay trustees with the time and … Read more
Government Response
The government committed to planning a consultation later this year to consider how TPR and DWP could provide additional support for lay trustees, but did not set out plans for ensuring every trustee board has an accredited member or a timetable.
Department for Work and Pensions
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17 Recommendation Acknowledged
Third Report - Defined benefit pen…
Explain the core aim of a public consolidator for pension schemes
There may be a good case for a public consolidator. However, there are complex issues to address, particularly in relation to who would underwrite the risk, the impact on member benefits and how its introduction would be justified. In response … Read more
Government Response
The government stated it is exploring whether a small, focused Government Consolidator could be an option for schemes less attractive to commercial providers, and will respond to a consultation on this in the spring, but did not definitively explain its core aim.
Department for Work and Pensions
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19 Recommendation Acknowledged
Third Report - Defined benefit pen…
Give the PPF more flexibility in setting its levy rates
The Government should find an early legislative opportunity to give the PPF more flexibility in how it sets the levy, allowing it to reduce it to zero and then increase it again if necessary.
Government Response
The government announced it will consider giving the Board of the PPF greater flexibility to adjust the annual pension protection levy, aiming to reduce costs for levy payers, but did not commit to specific legislative action or a timeline.
Department for Work and Pensions
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20 Conclusion Acknowledged
Third Report - Defined benefit pen…
Bring forward promised consultation on PPF levy changes and compensation levels for scheme members
We applaud the fact that the PPF is now reasonably confident that it has the funds it needs to meet potential claims on it. This is a significant achievement. There is now an opportunity to consider how the £12 billion … Read more
Government Response
The government noted the PPF's reduced levy estimate and new rule provision for a zero levy pending legislative changes, and committed to considering and reflecting on feedback regarding compensation levels and pre-97 indexation, but did not commit to bringing forward the requested consultation.
Department for Work and Pensions
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21 Conclusion Acknowledged
Third Report - Defined benefit pen…
Legislate to provide indexation on pre-1997 PPF compensation rights and review post-1997 cap
Non-indexation of pre-1997 benefits has had a significant impact on PPF members and disproportionately on older members and women, reducing the value of their compensation in real terms. Given the £12 billion in PPF reserves, the potential impact on levy … Read more
Government Response
The government acknowledges the issues raised by PPF and FAS members regarding pre-1997 indexation, states it is taking advice on options, and will continue to work with the PPF to balance stakeholder interests.
Department for Work and Pensions
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Government Response AI assessment · 23 of 9 classified
Accepted 8
Acknowledged 9
Deferred 2
Rejected 4
Total 9 recs + 14 conclusions
Correspondence 15 letters
4 Dec 2024 Statement from the Office of National Statistics (ONS), the Pensions Regulator (TPR) and the Pension Protection Fund (PPF) on valuing the assets in Defined Benefit (DB) pension schemes
Parliament page
13 Mar 2024 Correspondence with The Pensions Regulator relating to the impact on Defined benefit pension schemes after the LDI episode
Parliament page
6 Mar 2024 Correspondence with the Minister for Pensions relating to Defined Benefit pension schemes
Parliament page
7 Feb 2024 Correspondence from TPR relating to Defined Benefit pension schemes with Liability Driven Investments
Parliament page
31 Jan 2024 Correspondence with Economic Secretary to the Treasury relating to Defined benefit pensions
Parliament page
24 Jan 2024 Correspondence with the Economic Secretary to the Treasury relating to Defined benefit pension schemes - evidence session follow-up
Parliament page
10 Jan 2024 Correspondence with the Minister for Pensions relating to meeting with the Pensions Action Group
Parliament page
10 Jan 2024 Correspondence with the Office for National Statistics relating to Defined benefit pension schemes
Parliament page
10 Jan 2024 Correspondence with the Minister for Pensions relating to Proposed Scheme Funding Regime — Open Defined benefit pension schemes
Parliament page
13 Dec 2023 Correspondence with the Pension Protection Fund relating to Defined benefit pension schemes
Parliament page
29 Nov 2023 Correspondence with Pension Protection Fund relating to Defined benefit pension schemes
Parliament page
8 Nov 2023 Correspondence from Clara-Pensions relating to defined benefit pension schemes
Parliament page
8 Nov 2023 Correspondence with the Pension Protection Fund relating to Pension Protection Fund compensation levels
Parliament page
25 Oct 2023 Correspondence with the Pension Protection Fund relating to defined benefit pension scheme inquiry and updated data
Parliament page
18 Oct 2023 Correspondence with the Prudential Regulation Authority relating to Defined benefit pension scheme consolidation
Parliament page