Defined Benefit Pension Schemes – Latest ‘White Paper’
There was some positive news for defined benefit (DB) pension scheme members with the release of the Department of Work and Pensions’ (DWPs) White Paper on 19th March 2018. In summary, the paper explains how the UK government intends to increase the protection for DB pension scheme members and seeks to make improvements to the DB regime.
The Pensions Regulator (TPR)
In the paper, TPR have been handed new powers by the government to issue punitive charges (or even instigate criminal proceedings - in extreme cases) for those who deliberately put DB pension schemes at risk with their decisions.
TPR’s increased powers (through a revision to the TPRs current code of practice) will also see them enforce DB scheme funding standards, with more guidance given on what constitutes prudence when drawing up scheme recovery plans – with some schemes requiring stronger funding targets (if a long term statutory funding objective is set).
Furthermore, employers or trustees of DB schemes will need to appoint a “Chair” to report to the TPR.
There is further good news for DB scheme members as the White Paper confirms that, for the time being, the Government has ruled out a statutory override to allow employers or trustees to change the measure of inflation used to calculate annual increases to DB pensions. This means that schemes offering members pension increases at the retail prices index (RPI) would not be allowed to automatically switch from RPI to the traditionally lower inflation measure of the consumer prices index (CPI).
If you are a current or defined pension scheme member and would like to know how the latest government paper affects you, please contact us on the following: https://www.bdhsterling.com/contact/