‘Pension rules need to reflect the world of today not the world of yesterday’ – Steve Webb shares reaction to DWP Select Committee Report

by | Mar 26, 2024

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The Work and Pensions Select Committee has today published its long-awaited report on Defined Benefit pension schemes.  

LCP submitted written evidence to the Committee and LCP partner Steve Webb gave oral evidence early in the Committee’s inquiries. Commenting on the report’s findings, Steve Webb said:

 
 

“So many of today’s rules and regulations around pensions were born of a world of pension deficits and worries about member pensions being paid.   Today the world is very different, with the majority of schemes running a surplus and debating how best to use it.   I agree with the Committee that pension rules and regulations need to reflect the world of today not the world of yesterday.

In particular, the rules have not caught up with the new world of surpluses and may mean that schemes and members do not get the most benefit from their improved financial position.   The Government needs to decide urgently how it can make sure member benefits are secure and at the same time help companies, members and the wider economy benefit from the assets of over £1 trillion which are still sitting in these schemes.  In our view the offer a full PPF underpin in exchange for payment of a new super-levy remains the best way to achieve this”.

Also commenting on the report, a spokeseperson for The Pensions Regulator said: “It’s our job to make sure pension savers get their promised benefits, and although funding levels are at their best levels in recent memory with around 80% of pensions schemes fully funded, we are not complacent. 

 
 

Schemes can rapidly be affected by market conditions, corporate activity and insolvency events, which is why we make sure that effective long-term risk management is at the heart of our approach and the forthcoming DB Funding Code and Regulations.   The Code also allows for open schemes with a strong sponsoring employer to invest a significant portion of their portfolio in growth assets. “We will consider the Committee’s recommendations carefully and respond in due course.”

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