The National Pensioners Convention, the UK’s largest campaign group run for and by older people fears ministers may be preparing to proceed with proposals originally mooted by the previous Conservative government.
The Labour administration believes surplus cash in the Defined Benefit pension funds will unlock new investment in the economy. But a survey by the Pension Insurance Corporation [PIC] reveals many of the 8.8 million people who still belong to DB pension funds, better known as final salary schemes, worry the plans will jeopardise their incomes in later life.
The poll found a staggering 94 per cent of DB pension members said they do not want politicians interfering with their private and occupational pensions.
Jan Shortt, NPC General Secretary, commented: “Defined Benefit schemes should be protected and not put at risk by allowing companies to withdraw surplus funds in pensions. Even the original Conservative government consultation on the idea said it would ‘reduce security’ for DB pension members.”
The NPC general secretary will now be writing to chancellor Rachel Reeves and under secretary of state for pensions Torsten Bell to ask for an immediate pause to any DB Scheme ‘surplus’ extraction proposal. We will also insist that they consult more widely with the pension sector and organisations and charities representing older people before taking any final decision.
“The Pensions Regulator is responsible for making sure DB schemes deliver under The Pensions Acts of 2004 and 2008.
“But even voicing its support for the government proposals the regulator states: ‘Our first priority must be to ensure pension scheme members have the best chance of receiving their promised benefits.
“With such volatile markets the regulator and government ought to remember this priority, and realise that it is a bad time to be making changes just because things seem rosy today.
“There is every chance that the global markets will have an impact on all investments. Any downturn on returns will cause members of schemes to feel insecure. And any proposal to access cash from what is seen as a ‘surplus’ will rightly cause a degree of anger.”
NPC knows not everyone on DB schemes are on substantial pensions, with many of the oldest having seen their funds devalued by the rising cost of living. This month’s 4.1 per cent state pension rise is already undermined, with millions of older people paying tax for the first time: millions more having lost their universal Winter Fuel Payments as energy prices continue to rocket, and countless disabled pensioners and their carers face losing the Personal Independence Payment.
PIC Survey – PIC, a specialist insurer of UK DB pension schemes, polled 1,000 members of DB schemes. Of those surveyed, 60 per cent said they fear the Government’s plan would create risks for them and other members.
Tracy Blackwell, CEO of PIC, said: “We think the views of DB members, many of them elderly, many of them classified as vulnerable, should be properly considered in any decision about policy that the Government’s own document says would reduce the security of their pensions. So far, their voices have been absent in this debate.
“What this polling shows for the first time is that many of the people who rely on a DB pension are afraid of changes that could make their pensions less secure. It took a long time to build up a legal regime for DB pensions that puts members first, after the scandals of the 1980s and 1990s. Members are clearly concerned at the prospect of these vital protections being watered down and I would advise them to write to their MP about these proposals.
“Our view is that it is fundamentally right that members’ benefits are fully secured before the sponsoring employer gets any cash back, a position which should align everyone’s interests.
Ministers need to be very careful with this issue given that this is about the financial wellbeing of generally older, and potentially vulnerable, people.
Rodney Sadd
Crowland
supporter of NPC
