The Pensions and Lifetime Savings Association (PLSA) has commented on the publication of the Department for Work and Pensions (DWP) Defined Benefit (DB) White Paper: Protecting Defined Benefit Pension Schemes.
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, said:
“We welcome this important White Paper. While the regulatory framework will ensure most members of DB schemes see their benefits paid in full, we share the Government’s view that there is a need for a range of different measures to strengthen that framework and further improve benefit security. More than 11 million people rely on defined benefit pensions for their retirement income and need to be able to do so with confidence.
“However, employer covenants are under pressure and failures like Carillion, BHS and most recently, Toys R Us clearly signal that this is a situation which cannot be ignored. We look forward to working closely with the DWP and the industry as we work together to build more secure defined benefit pensions.
“We are glad to see that the Government has been looking at the relationship between good corporate governance and good outcomes for pension scheme members. The Pension Regulator’s ability to regulate the system effectively depends on effective governance of both pension schemes and the companies which stand behind them.
Changes to The Pensions Regulator’s Powers:
“The UK pensions industry looks to the Pensions Regulator (TPR) to set standards while acting as a preventative lever and a defence against malpractice. Today’s proposals would give TPR additional powers as it works to avoid situations like those experienced by BHS, British Steel and Carillion pension schemes. The ability to impose significant fines, undertake enhanced information gathering exercises and introduce an increased oversight regime can all play a role in safeguarding people’s pensions.
“However, while there is support for ensuring that TPR has the power to undertake its role, our members are keen that they are proportional and practical. We also need to ensure that we guard against unintended consequences as we build a more sustainable system. Further consultation is needed to identify how these new powers can work with and complement TPR’s existing approach and its commitment to be “clearer, quicker and tougher”.
Improving the Way Things Work:
“While defined benefit (DB) pensions continue to be the backbone for many savers’ retirement aspirations, it is clear that there is room for improvement and changes in order to help more schemes deliver on their promises. A clear understanding of a scheme’s funding position is vital and we welcome the requirement for scheme funding objectives to include a clear view of long-term aims – be they to run-on with the employer, reaching self-sufficiency or buy-out.
“Trustees play a significant role in ensuring that a scheme delivers on its promises. We welcome the requirement for each scheme to have a chair of trustees – a key tenet of good governance. In addition, we are particularly pleased that the White Paper introduces the requirement on DB schemes to provide TPR with a Chair’s statement in line with those currently produced by DC schemes. This is an issue that we believe is key to help build high standards of governance and operational effectiveness across the sector.”
“We are pleased to see that the White Paper takes forward the work on consolidation developed by the PLSA’s DB Taskforce over the past two years. There is a growing body of evidence that consolidation in its many guises could provide the benefits of scale for those schemes that choose to consolidate. We look forward to working with DWP on this issue going forward as we work to strengthen DB pensions and give more members a better chance of receiving full benefits.”
NOTES TO EDITORS
ABOUT THE PENSIONS AND LIFETIME SAVINGS ASSOCIATION
We’re the Pensions and Lifetime Savings Association; the national association with a ninety year history of helping pension professionals run better pension schemes. Our members include over 1,300 pension schemes with 20 million members and £1 trillion in assets, and over 400 businesses. They make us the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.
Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.
Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
T: 020 7601 1748, M: 07901 007713, E: [email protected]
Eleanor Carric, PR Manager, Pensions and Lifetime Savings Association
T: 020 7601 1718, M: 07825 171 446, E: [email protected]