DWP to unveil plans for defined benefit pensions

DWP to unveil plans for defined benefit pensions

The Department for Work and Pensions will launch a White Paper on the future of defined benefit pension schemes in the coming months.

This follows a consultation which was launched in February into what needed to be done to ensure confidence and secure the future of these schemes.

It is understood the White Paper, due to be published in the winter, will consider the need to adapt the regulatory regime to improve security for members.

This will include considering providing more proactive rather than reactive powers for The Pensions Regulator.

The paper will also consider “innovative” delivery structures such as consolidation and measures to drive efficiency within the sector.

Secretary of State for Work and Pensions David Gauke said: “The vast majority of defined benefit pension schemes are helping to provide a secure retirement for millions of people.

“However it is clear that experiences differ from scheme to scheme.

“With more than £1.5trn invested in them, people need to have confidence that they are resilient and robustly regulated.

“Our way forward is clear and we will ensure that the system continues to balance the needs of consumers, the schemes themselves and business for the future.”

Among the proposals considered during the DWP’s consultation was the creation of a DB “superfund” to provide small schemes with scale.

On scheme affordability, the paper also proposed methods to allow “stressed” DB schemes to ease their burdens, including by switching their annual pension increases from the retail price index to the consumer price index.

The discussion of member protection centred around giving The Pensions Regulator more powers, including the power to impose much more punative fines on sponsoring companies that fail to meet their obligations.

Ministers have faced calls for action on DB pensions following the BHS debacle, which saw thousands of people’s pensions under threat after the department store’s collapse.