The Green Paper has been long-awaited and in it, the DWP offers a wide range of proposals for consideration. Although the Government is careful to state that it does not consider DB schemes to be “unaffordable” for employers, its proposals focus on how that affordability could potentially be better managed.
The scope of the DWP’s suggestions is very broad. It ranges from possible increased flexibility in the scheme funding regime, which is likely to uncontroversial, to a possible reduction of members’ future DB benefits in some circumstances, which is likely to meet with strong objection.
Many aspects of the Green Paper’s contents have been aired and discussed in both the pensions and national press since its intended publication was first announced. This has been advantageous in that some of the more radical proposals it sets out have taken root in the collective pensions consciousness and have, as a result, attracted less criticism than they otherwise might have.
One issue on which the press are likely to comment further is the increased role of TPR which would be required if some of the proposed changes were implemented. The possible increase in workload seems incompatible at a time when TPR has committed to reducing its scheme regulation budget by 17 per cent over the next four years.
However, the Green Paper is not advocating a complete overhaul of the existing pension framework and could be viewed as simply “testing the water” as to whether there is an appetite for change. Nevertheless, the DWP and the pensions industry as a whole seem to be in agreement that some refinement of the existing system may be beneficial, especially for those schemes with struggling employers.