Work and Pensions Committee's Third Report on Defined Benefit Pension Schemes highlights pivotal areas for improvement

Joe Dabrowski, Deputy Director - Policy at the Pensions and Lifetime Savings Association, said; “The recommendations from the Work and Pensions Committee's Third Report on Defined Benefit Pension Schemes highlights pivotal areas for improvement within the pension regulatory framework. The recommendation to provide the Pension Protection Fund (PPF) with greater flexibility in adjusting its levy down to zero is a pragmatic step forward and reflects the PPF’s strong financial position over recent years.

“In addition, the proposal to shift TPR's objective from solely protecting the PPF to safeguarding both past and future service benefits reflects a more comprehensive approach to scheme funding and member outcomes. With strong funding levels across the DB sector and the PPF boasting substantial reserves exceeding £12 billion, there's a consensus that the focus should now extend beyond protecting the PPF alone.

“It is also positive to see that the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) will continue working together to address concerns surrounding open schemes, particularly regarding the employer covenant horizon. This collaborative effort not only mitigates the risk of premature de-risking but also ensures the long-term sustainability of these schemes.

“The Committee's call for expedited legislation for pension superfunds reflects an understanding of the need for innovative solutions to meet the challenges facing pension schemes today. Introducing primary legislation for pension superfunds is crucial to providing scheme members with the same level of protection as the existing Defined Benefit (DB) funding regime.

“Finally, the recommendations to improve the standards of knowledge and understanding of trustees is encouraging, as elevating trustee capabilities underpins the overall success of DB schemes, and ultimately, the outcomes of its savers.”

Cali Sullivan, PR Manager

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