Pensions - Articles - PLSA comment on DWPs paper on DB Pension schemes

 Feedback from our members and analysis undertaken by the PLSA’s DB Taskforce suggest that the affordability challenges facing DB schemes and employers are much more significant than the position set out in the Green Paper. Schemes in the bottom two covenant groups – as allocated by the Regulator – have approximately only a 50:50 chance of reaching funding solvency, with an estimated 3 million people represented in these groups.

  

 Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, said:  “Millions of people in the UK rely on defined benefit pensions for a significant proportion of their retirement income but the system faces a major funding challenge which needs to be addressed. This is a welcome Green Paper which will start the process of getting DB back on track."

  

 “The focus on improving scheme governance and member protection is particularly important. We support a proportional strengthening of the Regulator’s powers to intervene where corporate action may put members’ interests at risk. We would also support further emphasis on making improvements to both the governance and structure of DB schemes."

  

 “The regulatory focus needs to shift from outputs to inputs, regulating for strong governance through the encouragement of strong, diverse governing bodies. Strong governance is also one of the many benefits of consolidation and we welcome the Government’s recognition of the need to increase scale in the sector.”

  

 The PLSA’s next report into consolidation will be launched later in the year and will provide further details on the benefits it might provide and how this might work in practice.”