The Work and Pensions Committee has concluded in its long-awaited report that DB schemes remain of critical importance to both savers and the UK economy, despite a steady decline in scheme numbers over recent years.
Published on March 26, 2024, the report calls for a fresh approach and recommends:
- General improvements in DB funding levels justify a change of approach in funding regulation and the treatment of surpluses.
- The PPF should be given more flexibility to reduce its levy to zero.
- The Regulator's statutory objective to protect the PPF should be replaced with a new objective to protect future and past service benefits.
- It recognises that the DWP and the Regulator need to invest in driving high standards of governance across pension schemes. It recommends that accreditation should be made mandatory for professional trustees. Ways to ensure lay trustees have the time and resources to become accredited should also be explored and it should be ensured that every trustee board has at least one accredited member, lay or professional, and a timetable for achieving that.
- The DWP and the Regulator should work together to ensure that open DB schemes (that is, those accepting new members) are not compelled to de-risk unnecessarily under the new funding regime. It is seen as essential that outstanding concerns are addressed in the revised DB funding code.
The Government should respond to the report by May 26, 2024.
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