The pensions industry has welcomed further consultation on strengthening the role of trustees in response to the House of Commons Work and Pensions committee’s report on utilising surplus funds in DB pension schemes.
Pensions minister Torsten Bell has written to the committee, outlining previous plans to allow well-funded DB schemes to share surpluses with sponsoring employers and member to fuel growth and unlock investment into the economy.
But Bell added that stringent safeguards will remain in place to protect members. In his letter he says: “Reflecting on the Committee’s recommendations, we will explore ways to strengthen trustee capability and governance, to ensure we safeguard member benefits and maximise economic growth in a consolidated landscape.”
His pointed out that DB schemes remain a “core part of the UK’s financial plumbing” holding £1.2trillion in assets.
His comments were welcomed by the wider pensions industry. The Pensions Management Institute (PMI) chief strategy officer Helen Forrest Hall says: “The PMI’s welcomes the government’s response to the Work and Pensions Committee DB inquiry and in particular the commitment to a consultation this year exploring what could be done to strengthen trustee capability and governance across the whole pensions sector.
“In a world of increasingly large and complex pension schemes it is only right that the sector considers the required knowledge and capabilities of those safeguarding the pensions of millions of members. The PMI has been working hard with the industry to drive up standards and further develop our education offering for trustees and we look forward to engaging with the government on this important work.”
The Association of British Insurers head of long-term saving policy Hetty Ahern, adds: “The Government’s response to the Work and Pensions Select Committee rightly highlights that DB schemes’ funding is now in a much better place, with TPR this week estimating that over half of schemes are now funded on a buyout basis.
“While this improvement in funding is welcome, it could change in future. Therefore trustees will still need to carefully consider the long-term future of their scheme and the best interests of their scheme members. The insurance market is well-placed and well-positioned to play a key role in securing peoples’ pensions through buy-ins or a full scheme buyout, whilst also providing peace of mind to sponsoring employers.”
It adds that UK annuity providers are also some of the biggest investors at home. “Our research finds that nearly two thirds of their assets invested in the UK. The buyout market is therefore a key player in the Government’s growth agenda.”
