The Pensions and Lifetime Savings Association (PLSA) today published its response to the Department for Work and Pensions (DWP) Green Paper ‘Security and Sustainability in Defined Benefit (DB) Pension Schemes’ [click here for full response].
Feedback from our members and analysis undertaken by the PLSA’s DB Taskforce suggest that the affordability challenges facing DB schemes and employers are much more significant than the position set out in the Green Paper. Schemes in the bottom two covenant groups – as allocated by the Regulator – have approximately only a 50:50 chance of reaching funding solvency, with an estimated 3 million people represented in these groups.
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, said:
“Millions of people in the UK rely on defined benefit pensions for a significant proportion of their retirement income but the system faces a major funding challenge which needs to be addressed. This is a welcome Green Paper which will start the process of getting DB back on track.
“The focus on improving scheme governance and member protection is particularly important. We support a proportional strengthening of the Regulator’s powers to intervene where corporate action may put members’ interests at risk. We would also support further emphasis on making improvements to both the governance and structure of DB schemes.
“The regulatory focus needs to shift from outputs to inputs, regulating for strong governance through the encouragement of strong, diverse governing bodies. Strong governance is also one of the many benefits of consolidation and we welcome the Government’s recognition of the need to increase scale in the sector.”
The PLSA’s next report into consolidation will be launched later in the year and will provide further details on the benefits it might provide and how this might work in practice.”
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.
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