The polling, by Pension Insurance Corporation plc, the specialist insurer of UK DB pension schemes, reveals that many of the 8.8 million people who still belong to DB pensions – sometimes known as final salary schemes – feel the Government’s plans could jeopardise their incomes in later life.
The vast majority of DB pension members – 94% - say they don’t want politicians interfering with their pensions.
Ministers are drawing up plans to allow the companies that sponsor DB pension schemes to receive “surplus” cash from those schemes, saying this could unlock new investment in the economy. However, early evidence from companies getting access to surplus money shows they are more likely to pass the funds to their shareholders.
The “surplus” cash in many DB schemes is also a relatively recent phenomenon, that began in the summer of 2022. Prior to that many DB schemes were in deficit for most of the previous 15 years.
The prospect of funds being removed from their pension schemes worries many DB members, the polling of 1,000 members reveals. In the survey, 60% of DB members said they fear that the Government’s plan would create risks for them and other members. When asked about the purpose of pension assets, 56% of DB members said they want money in their scheme to benefit them, not be given to employers.
The original Government consultation on the surplus extraction policy says: “Any extraction of surplus will reduce security for members.”
But the polling shows that security is extremely important to pension scheme members:
- 96% say certainty about the level of their pension over future years is “very important”, or “important”
- 96% also say that having secure pension income not affected by financial markets is “very important” or “important”
- Older members – those with most to lose if things go wrong - are consequently overwhelmingly opposed to surplus extraction: 70% of over 55’s oppose extraction
There is very strong opposition to politicians having a role in DB pensions:
- 94% say it is important that “politicians can’t interfere with my pension”
- Only 8% of members trust politicians to take decisions that affect their pension incomes
By contrast, DB members have very high trust in scheme trustees:
- 90% say it is important that “trustees look after my pension, meaning employers can't get access to the money in the scheme”
Tracy Blackwell, CEO of PIC, said: “We think the views of DB members, many of them elderly, many of them classified as vulnerable, should be properly considered in any decision about a policy that the Government’s own document says would reduce the security of their pensions. So far, their voices have been entirely absent in this debate.
“What this polling shows for the first time is that many of the people who rely on a DB pension are afraid of changes that could make their pensions less secure. It took a long time to build up a legal regime for DB pensions that puts members first, after the scandals of the 1980’s and 1990’s. Members are clearly concerned at the prospect of these vital protections being watered down and I would advise them to write to their MP about these proposals.
“Finally, it is right for us to acknowledge that like all the other participants in this debate, PIC has an interest in the outcome. We take on DB schemes and pay the pensions of 400,000 people, and have paid more than £16 billion to our pensioners so far. Our view is that it is fundamentally right that members’ benefits are fully secured before the sponsoring employer gets any cash back – a position which should align everyone’s interests. Minsters need to be very careful with this issue given that this is about the financial wellbeing of generally older, and potentially vulnerable, people.”
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