Pre-1997 Pensions: Discretionary Increases

Julian Lewis Excerpts

Thursday 19th March 2026 Commons Chamber

[Luke Akehurst]

I will give way to the right hon. Member for New Forest East (Sir Julian Lewis) first.

[Sir Julian Lewis (New Forest East) (Con)]

The hon. Gentleman is making an excellent presentation. Rather curiously, up until 2023, ExxonMobil pensioners got automatically indexed uplifts to their pensions, but for some reason from that date onwards, the company changed its policy and now they are not getting the discretionary uplift. The trustees there say that they have no power and that it is up to the company to decide whether this discretionary uplift occurs. Is one way forward perhaps to ask the Minister to give an undertaking that the trustees should have the power to award such discretionary uplifts linked to indexation?

[Luke Akehurst]

I thank the right hon. Gentleman for drawing attention to that particular anomaly.

--- Later in debate ---

[Torsten Bell]

I hear the right hon. Member’s point. I am not going to comment on individual legal cases, obviously, but the basis of the distinction at 1997 reflects the decisions taken in 1995 by a previous Conservative Administration to introduce statutory indexation, but not wanting to do that for accruals that had already taken place. The Pensions Act 1995 brought in statutory indexation from 1997 onwards. 

We can recognise the underlying reasons for this situation—not retrospectively changing the basis of scheme rules—while sharing Members’ huge frustrations with it. It is why I continue to encourage trustees and sponsoring employers to think carefully about the effect of inflation on member benefits when making decisions. The Pensions Regulator already sets out that trustees should consider specifically—not just generally—the situation of those members and whether the scheme has a history of making such awards.

Pensions legislation sets minimum legal standards that all schemes must meet, and they are designed to strike the balance between fair and workable, and having a stable DB landscape. I completely recognise the case for change that the right hon. Member for New Forest East has made today and in the past. The challenge is that it would be unreasonable to retrospectively change long-standing rules in blanket terms in a way that would put some schemes’ stability at risk, whether that is today by fundamentally changing their funding position, or in future, when we do not know what the world will look like.

[Sir Julian Lewis]

If the Minister would follow the recommendation of at least giving the trustees the full power to make the decision over discretionary awards and taking it away from the company, one could be pretty sure that if the scheme went into deficit, the trustees would act accordingly.

[Torsten Bell]

I will come in a second to the point that the right hon. Gentleman is making, which is about where power lies in the system.