We will not stand for employers shirking their pensions responsibilities
3 min read
The Government's reforms to the pensions system will give workers confidence and bring irresponsible companies to book, writes Work and Pensions Secretary Esther McVey.
There are more than 10.5 million Defined Benefit Pension scheme members in the UK. So making sure these schemes are run well and are secure is hugely important and the truth is, the vast majority of these schemes are.
Most employers want to – and are – doing the right thing for their employees and most people will get their pension paid in full.
And if the worst happens and a company fails we have a strong system of pension protection in place. The Pension Protection Fund, which is paid for by a levy on DB schemes, can step in to support pension members.
Since 2005 the Pensions Regulator has secured more than £1 billion through settlements to make sure that people do not miss out on their pensions. There are countless untold stories of the work the Regulator does behind the scenes every day making sure businesses tackle their pension problems early and never hit the headlines.
It’s a system that fundamentally works well, funded by business for the good of pension scheme members.
However, some recent very high profile cases have shown how a small number of bosses can risk their employees’ financial futures. This just isn’t right.
Pensioners, now and in the future, need faith that they will get the pension they have paid into all their working lives. Businesses too need support to ensure they can grow and prosper, while meeting their pension promises.
That is why tomorrow, after a wide-ranging consultation with workers, employers and the pensions industry, the Government will be setting out measures to support DB schemes and employers.
For the majority of employers who are already doing the right thing, we won’t be making major changes. But we will give them clearer funding standards, so everyone knows exactly what is expected of them and we will be putting in place new laws to make it easier for DB pension schemes to join together if they want, to help them become cheaper and easier to run.
For the small minority of irresponsible employers, it is important that the pension protection system is strengthened. We will be doing this in a number of ways.
We will give the Pensions Regulator more powers to get the information they need, when they need it.
We will bring in tougher penalties, including significant fines and, for the worst cases, criminal sanctions, for those who wilfully or recklessly put the financial future of their employees at risk.
We are speaking to the minority, and our message is clear.
We will not stand for employers evading their responsibilities and relying on the protection that the system offers whilst others who do play by the rules, have to foot the bill.
Neither will we stand for company directors balancing the books at the expense of long serving employees’ retirement funds.
Our goal is to make sure people have confidence in these schemes by increasing the protections in place and by stopping the irresponsible few in their tracks. It takes time to build trust and confidence - but much less to undermine all that hard work.
These changes show that we have held firm on our manifesto commitment to protect private pensions. We will not allow those at the top to gamble with your financial future.
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