Pensions - Articles - Aegon comment on DWP Select Committee inquiry of DB pensions

 “The latest PPF Index showed that over 80% of schemes are underfunded and in reality, some have little chance of plugging their deficit. This is only going to get worse following a fall in base rates, to an all time low of 0.25% and a new round of quantitative easing, on top of increasing longevity, causing even more pain for employers. No one could have envisioned this when defined benefit schemes were set up 40 or more years ago. But it needs to be made absolutely clear that unscrupulous employers cannot simply offload their pension liabilities and walk away. The Pensions Regulator needs to be given stronger powers designed for today’s challenges, to block corporate deals which are unfairly detrimental to members of defined benefit schemes. Employers should be forced to get clearance from the Pensions Regulator for any deals with implications for defined benefit scheme security whether there is a pension deficit or not.

 “We also need a considered rethink on how to respond to pension scheme deficits where it is beyond doubt that employers could ever afford to close them. Allowing employers to cut back future benefit increases, even with Pension Regulator approval, is radical. We mustn’t allow any such moves designed for extreme circumstances to set defined benefit promises on a slippery slope. If there was ever any doubt, in the private sector, the golden age of defined benefit pension schemes is well and truly over.“