As we said when we published the Green Paper, defined
benefit schemes are an important pillar of the UK economy.
Around £1.5 trillion is invested by about 5,500 schemes.
More importantly, these pensions are a key part of many
people’s retirement income. There are 10.5 million members
in the UK with a defined benefit pension: it is crucially
important that the system delivers the retirement income
they have saved for over many years of hard work.
We know that the vast majority of employers with these
schemes want to do the right thing by their employees. Our
2017 Green Paper examined the evidence around defined
benefit scheme affordability, and concluded that the
majority of employers can and do fund their schemes
appropriately. The responses to the Green Paper supported
this. However, to help trustees and employers work even
more effectively towards a long-term goal, we are
introducing changes to scheme funding. Where employers want
the best for their employees, we want to ensure that the
system supports this.
However, it is clear that not all employers want to act
fairly. At the heart of the White Paper is a strong message
for employers tempted to act in a way that is detrimental
to their pension scheme. We will not tolerate such
behaviour, and will come down heavily on attempts by
employers to avoid their responsibilities. We are
supporting the Pensions Regulator to be a clearer, quicker
and tougher organisation by giving it new and improved
powers to gather information and require employer
co-operation. Where there is evidence of unscrupulous
behaviour, we are introducing measures including a punitive
fines regime and, in the most serious cases, a new criminal
offence for those who deliberately and recklessly put their
pension scheme at risk.
Finally, we are consulting on the legislative framework and
accreditation regime for consolidation, providing industry
with the opportunity to innovate whilst ensuring there are
robust safeguards in place to protect members’ benefits.
This will be the first step in enabling schemes greater
opportunities to realise the benefits of scale achieved
through consolidation, and will benefit both members and
employers.
The White Paper relates only to private sector defined
benefit schemes and is not concerned with other types of
pension provision, such as public service pension schemes
or defined contribution schemes. A response to our
consultation on the future of the British Steel Pension
Scheme (BSPS) is included in chapter four of the White
Paper.
Defined benefit pensions are a subject of great importance
to many people, representing their hopes for the future. We
are determined to ensure that these hopes are protected.
This White Paper is a key step towards a more secure future
for members of these schemes.
