Pensions - Articles - Comment on DWP announcement on DB White Paper and TPR

 “The aftershocks from BHS are still being felt throughout the DB world and this is clearly going to be addressed in the upcoming DB White Paper which promises to provide more proactive powers for tPR. After these kinds of scandals however, we are at risk of seeing the pendulum swing too far in the direction of over regulation.

 “You cannot argue with the rhetoric of protecting pensions from unscrupulous bosses. There is a risk for DB schemes and members that is simply unavoidable in the current system. The PPF’s modelling suggests that in the worst 10% of outcomes, 1,000 sponsors will be bankrupt by 2030. Some of these will be household name companies. BHS had a unique history, however, which made it particularly newsworthy.

 “More generally we must remember that DB pensions were never intended to be risk free, and never can be. Freedom and Choice is also leading to cash being taken out of schemes which is putting additional pressure on them. Stressed schemes need good reasons to carry on and if they go into insolvency then that may be an unavoidable consequence. The reality is that this reckless behaviour is in the very small minority and the majority of schemes are on track for members to receive their benefits.

 “tPR already does have powers, but it finds it hard to use them in the way that was intended. There is a need to sharpen its teeth, but first we must start with making it easier for it to use the powers it already has and hopefully this is how the White Paper will address this.”