DB green paper puts living standards at risk for millions - Steve Webb, Royal London

Commenting on today’s Green Paper into Defined Benefit pension schemes, Steve Webb, Director of Policy at Royal London, said:

“This must be one of the ‘greenest’ Green Papers in living memory.   Despite months of public debate led by the Select Committee and the pensions industry, the Government’s own thinking does not seem to have advanced significantly.    Given the years that can elapse between floating ideas in a Green Paper and implementing them on the ground, the lack of firm proposals is disappointing.    Even in the area of trying to avoid a repeat of the BHS fiasco, the Green Paper is remarkably timid on the idea of giving the regulator more power to challenge takeovers which could damage a pension scheme.

“The most worrying proposal is to allow certain schemes to ‘suspend’ annual pension increases if money is tight.     With rising inflation, annual indexation is an important part of protecting the living standards of the retired population.    There is a significant risk that relaxing standards on inflation protection with the best of intentions for exceptional cases could be exploited and lead to millions of retired people being at risk of cuts in their real living standards.”