The Department for Work and Pensions (DWP) in the United Kingdom has proposed giving the Pensions Regulator the power to fine employers who deliberately place defined benefit (DB) schemes at risk, as it takes a tough line with bosses.
In a much-anticipated white paper released this week, the DWP outlined its plan to safeguard the £1.5 trillion DB pension sector, giving the Regulator greater power to try to protect pension scheme members.
The DWP emphasised that it would strive to ensure that the proposals improved “the effectiveness and efficiency” of the Regulator’s anti-avoidance powers while mitigating any “adverse effect on legitimate business activity and the wider economy.”
Secretary of State for Work and Pensions, Esther McVey, told the British Parliament that it was important to ensure that DP system delivered retirement income
“As we said when we published the green paper, DB schemes are an important pillar in the UK economy. We know the vast majority of employers with these schemes want to do the right thing by their employees,” she said.
“However, to help trustees and employers work even more effectively towards a long-term goal, we are introducing changes to scheme funding. Where employers want the best for their employees, we want to ensure that the system supports this.”
Pensions expert at Old Mutual Wealth, Ian Browne, told International Investment in the United Kingdom that the recommendations were “squarely in favour of pension scheme members” as it gave the Regulator the ability to take “a tougher and more proactive role.”
“The long-awaited government white paper on Defined Benefit Schemes placed the Pensions Regulator at the heart of its solutions, with the ‘regulator’ referred to 357 times in the 76-page report,” Browne said.
“The White Paper took a tough line with employers and its recommendations were squarely in favour of pension scheme members.”