Protecting Defined Benefit Pensions Schemes

The March 2018 Department for Work and Pensions (DWP) White Paper is wide ranging in its compass, inevitably driven by the recent high-profile pension schemes in the news and the consequent intense political and media interest. Given the extensive scope of the paper it is no surprise that initially only certain elements of the planned improvements will be prioritised.

Despite fourteen years having passed from the 2004 Pensions Act and as supplemented by guidance and codes of practice from the Pensions Regulator (TPR), the DWP concludes there is still insufficient compliance with this framework by many Schemes. Their approach seems to be to bolster the enforcement of this regime by supplementing TPR’s powers and moving away from voluntary compliance. It would seem that it is thought that a regime of increased reporting by pension schemes, in which they need to make it explicit how they have complied with the regulatory framework, will drive the results the DWP wishes to see.

In the context of an increased adherence to regulation it is interesting to consider where the consolidation thread of the White Paper may lead? If a satisfactory consolidation model is found will we perhaps see smaller schemes who are struggling to comply with increasing regulatory standards with little alternative other than to either jump or be forced by TPR into consolidation?