Increasing protection for pension scheme members

The Government plans to increase powers requiring employers to provide contributions to a pension scheme if their actions could threaten the security of members' pensions.

The changes would give the Pensions Regulator stronger powers to reduce the risk to members' interests by scheme changes or corporate transactions. They would apply to an employer or their associates, including investors in the employer who might seek to profit from the scheme. There will be an eight week consultation on these changes.

Minister for Pensions Reform Mike O'Brien said: "The Pensions Regulator has done an excellent job in recent years but we need to ensure its powers keep pace with developments in the pensions market.

"Innovation is welcome, but I am concerned some emerging business models might not give the same protection for pension schemes as traditionally provided by a sponsoring employer or insurance capital.

“I spoke about this in a recent debate in the Commons. We need to ensure members' interests are protected. I want to guard against pension schemes simply being treated as a commodity to be bought or sold.

"The most effective way to tackle this problem is to give the Regulator the power to require contributions to pension schemes when an employer's actions reduce the security of members' benefits. I want to see pensions secure and promises kept so that members can look forward to a happy retirement."

Mr O'Brien said the powers would only be targeted at risky situations to avoid putting onerous burdens on employers. The vast majority of pension schemes would not be affected.

He added: "These measures will also avoid new costs being placed on the Pension Protection Fund, which could ultimately be passed on to responsible employers through the PPF levy.

"The proposed changes would also allow the Pensions Regulator to require an employer or associate to make additional contributions to a scheme where a 'bulk transfer' has been carried out and was detrimental to the interests of members."