The Work and Pensions Committee (WPC) has launched an inquiry into defined benefit (DB) pension schemes, stating that the recent improvement in aggregate scheme funding makes this "an important time to consider the future".

The WPC noted that whilst there are over 5,100 UK private sector DB schemes with around £1.4trn in assets, DB schemes in the private sector are in decline, with the number of private sector employees accruing new DB benefits falling from 3.5 million in 2006 to just under 0.9 million in 2022.

Despite this, the WPC argued that DB schemes remain "of critical importance", emphasising that 9.6 million members rely on them for a "substantial portion" of their expected retirement income.

Indeed, the committee noted that its previous Saving for Later Life inquiry found that people with access to a DB pension were more likely to be on track for an adequate income in retirement.

In particular, the committee is seeking views on the regulatory framework for DB schemes, also querying what The Pensions Regulator (TPR) should do to improve the quality of trustee boards.

The committee also queried whether there is sufficient capacity in the buyout market to meet demand, and what steps, if any, should be taken to encourage DB scheme consolidation.

In addition to this, it asked how recent improvements in funding levels could change the future role of DB schemes in UK pension provision, and what the implications of improved funding levels are specifically for the Pension Protection Fund (PPF).

The WPC also asked whether changes should be made to the PPF, Financial Assistance Scheme (FAS) or Fraud Compensation Fund (FCF) to improve outcomes for members.

The call for evidence closes on 26 April 2023.

Share Story: