Draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024

Gill Furniss Excerpts

Wednesday 13th March 2024 General Committees

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

It is a pleasure to serve under your chairpersonship, Dame Maria.

The regulations will place additional duties on the trustees of defined-benefit pension schemes to help ensure good practice. As the Minister pointed out, the vast majority of those schemes are already well run by dedicated trustees who want to do right by their members, but we know that that is not universal and we support measures to ensure that people’s money is well looked after.

The defined-benefit pensions sector is an evolving industry. As has been highlighted, the last significant legislation relating to it dates back to 2004-05, a time when many defined-benefit schemes were open. The landscape has changed significantly, and it is vital that regulation keeps up. For instance, research shows that many large schemes are yet to set long-term objectives. The requirements in the regulations should, I hope, help to fix that.

Turning to the consultation, I am aware that, while many stakeholders were supportive of the objectives of the regulations, concerns have been raised about the extra administrative burden that they may incur. I am also concerned that underfunding could be a risk to scheme members and pension protection funds, and I would welcome the Minister’s reassurance on that point. Will he outline what discussions he has had with the Pensions Regulator on its implementation of the flexibility that it may well be awarded? Could we please have more guidance on what exactly will be required from each DB scheme?

We will not oppose the regulations and we hope that they are successful in promoting good practice across the sector. I thank the Minister for his explanation of the changes, and I look forward to his answers about extra guidance for affected schemes and to the questions that I have just raised.