Why should you complete the survey?
The Department of Work & Pensions has asked for submissions from pensioners and other stakeholders to help with the development of secondary legislation and guidance for the Pensions Schemes Bill that is going through Parliament. Major changes in pensions legislation are rare. We need to seize this opportunity to be heard as pensioners. We are asking HPPA members to complete this anonymous survey so that we can collate all responses and submit our findings to the DWP to inform their results.
The Pension Schemes Bill places the onus for resolving any injustice as a shared responsibility between Trustee and sponsoring company. The government refuses to intervene despite knowing that for at least 17%, estimated to be 3 quarters of a million pensioners with Pre-97 have “lost out” for a quarter of a century.
However, the Government is proposing to intervene to change the law regarding the assets in the pensions funds, making it easier for the Trustees to release the assets (a.k.a. “surplus”) from the fund. The new rules for doing this have not been created. Yet elected members of Parliament are being asked to approve a major change of power effecting millions of people without detail.
The rules of Defined Benefits schemes vary but in general, the Trustee controls the fund (assets) and assets can only be withdrawn from the fund by the Trustee and under certain pre-defined conditions. Typically, there is no requirement for sharing those withdrawn assets with the members (pensioners). These members are also funders/investors in the scheme. Some members have invested more in their schemes, e.g. pensioners who transferred in pensions from other schemes or after advice from the sponsoring employer bought additional voluntary contributions (AVCs).
Pensioners with pre-97 service have already “lost out” due to the decades of the legal non-payment of indexation and the effect of inflation (“a.k.a. pension erosion”) The Pension Schemes Bill leaves the decision about removing assets and any potential sharing of assets to the Trustees to negotiate with the sponsoring company. It is the shared view of many experienced Trustees and pensions and actuarial experts that sponsoring companies dominate trustee bodies and effectively control the whole scheme management process including negotiating points. The Minister for Pensions acknowledges there is often an “imbalance of power”. Trustees are required to focus on the fund to ensure the fund’s provision of the promised benefits. While trustees have fiduciary duties, they do not represent members. Pensioners, in fact, do not have a seat at the table.
Promised benefits do not include “discretionary benefits”. If your pension scheme relied on discretionary increases for keeping pace with inflation (indexation) that decision belongs to the Sponsoring Company. The Trustee may recommend an increase be given but the sponsoring company decides. Pensioners, who contributed to the fund, and who are the central reason for the creation of the pension, are in fact only indirectly involved in the governance and decision-making process for the pension.
The evidence is clear, even to the DWP, that Pensioners with pre-97 service have “lost out” – to quote Baroness Sherlock and others. Reasonable expectations The scheme’s rules (“trust deed”) defines the responsibilities of the sponsoring company and the Trustee. However, many of these schemes were created decades ago under very different conditions. As Lord Bryn Davies of Brixton said “we should be guided by members’ reasonable expectations, not the fine detail of what was in the rules. It is what they could reasonably expect, and almost universally at that time, members expected reasonable Limited Price Indexation (LPI) increases.”
Unless the bill is changed Based on decades of experience and in some cases, documented company policy, Pre-97 pensioners are unlikely to see any improvement to their pension benefits, furthermore, assets may be withdrawn from their schemes.
Please click on the link below to respond to this survey. Please also share the link to increase the number of replies. For the last survey, we had over 500 replies, but we need many more replies to help increase our chance of getting our message across to the government.
Thank-you
Patricia Kennedy
Chair, Pre-97 HPPA & Alliance Pension Justice
PLEASE NOTE THE SURVEY ENDS ON AN INTENTIONALLY BLANK PAGE