Today the Government are publishing a Green Paper “Security and Sustainability in Defined Benefit Pension Schemes”. This paper also forms part of the Government response to the Work and Pensions Select Committee report into defined benefit pension schemes. I would like to thank the Committee for its report.
Defined benefit schemes are an important pillar of the UK economy and our pensions system. In order to generate the funds needed to pay the pensions of retired workers, around £1.5 trillion is invested by nearly 6,000 schemes. The Government are committed to a system that works for employers, schemes and the 11 million people who are in a defined benefit scheme.
While the Government do not believe that there is any systemic issues within the sector, it is clear that experiences differ from scheme to scheme. The Government recognise that recent years have been particularly challenging for some employers providing defined benefit pensions and the trustees responsible for running these schemes.
The Green Paper looks at a range of issues that have been raised by various stakeholders, for example, whether the Pensions Regulator’s powers should be extended to improve member protection. It focuses on four key areas—funding and investment, scheme affordability, member protection and consolidation, so that we can start to build consensus on whether we may want to reform the current system.
The 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.
The Government want to hear from all those with an interest in defined benefit schemes, in particular from scheme members themselves. The consultation will close on 14 May 2017.