Workplace Pensions: Index Linking
The question
To ask the Secretary of State for Work and Pensions, what estimate he has made of the number of members of defined benefit pension schemes with pre-1997 service who have received no discretionary pension increases in the last ten years; and what steps he is taking to encourage sponsoring employers and trustees to grant discretionary increases to pre-1997 pension benefits.
Answered by Torsten Bell
Analysis published by the Pensions Regulator indicates that, as of March 2023, around 17 per cent of members of private sector defined benefit pension schemes do not receive any pre-1997 indexation on benefits. This information can be found at: thepensionsregulator.gov.uk/en/document-library/research-and-analysis/data-requests.
Reforms in our Pension Schemes Bill will enable more trustees of well-funded defined benefit pension schemes to share surplus with employers, and deliver better outcomes for members, and benefit the wider economy, unlocking some of the estimated £160 billion of scheme surplus. As part of any agreement to release surplus funds to the employer, trustees will be better placed to negotiate additional benefits for members such as discretionary indexation.
The Pension Regulator already sets out that trustees should consider the situation of those members who would benefit from a discretionary increase and whether the scheme has a history of making such awards. The Regulator will be producing further guidance on surplus sharing once the legislation is in place.
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