Pre-97 Pension Justice Alliance Submission to DWP Consultation 6/8/26

Pre-97 Pension Justice Alliance Submission to DWP Consultation

“Surplus Flexibilities for Defined Benefit Pension Schemes:

Unlocking Value for Employers and Scheme Members”

Executive Summary

The Pensions Minister has made many public statements which present the Pension Schemes Act of 2026 as a route to deliver improved benefits to the pre-97 members of Defined Benefits schemes. The members of the Pre-97 Pension Justice Alliance refute this view based on our experience of over a quarter of a century of experience across 11 schemes. We view his statements as lacking veracity for our pensioner population who have not received adequate indexation for between 9 and 25 years and have experienced a loss of pension value between 30% to over 60%.

We have no confidence that the Act will be used to deliver justice for pre-97 pensioners without specific requirements in secondary legislation, which we will specify in this submission.  The major reasons include –

• No legal requirement for indexation or surplus sharing despite the investment of pre-97 pensioners.
• Trustees are dominated by the sponsoring company.
• Pensioners have little/no visibility of the governance process.
• Sponsoring companies have little connection to the pensioners as they are “legacy”.
• Trustees are “fiduciaries” of the scheme. They are not members’ representatives. Their role is to safeguard the assets specifically to secure the benefits promised by the scheme’s rules (not discretionary) to members, exercising independent, impartial judgment rather than acting as anyone’s direct agent.
• Trust law requires them to act in the best interests of all the scheme’s beneficiaries. Where different groups of members have competing interests, Trustees must weigh and balance those interests impartially. In other words, they cannot act solely on behalf of pre-97 pensioner.
• Trustees must take the employer’s covenant and affordability into account when setting the funding and investment strategy. The law expects a balance between security for all members and what’s sustainable for the sponsor.
• The trend to buy-in/buy-out is increasing. Some schemes are already in the process of buy-in/buy-out and will not have the financial flexibility for surplus release.
• For most schemes, the decision about changing members’ benefits belongs solely to the sponsoring company.
• The power of the larger system of the Pensions Industry and Government has been set against pre-97 justice for more than a quarter of a century while many schemes accrued surpluses.
• Fairness to scheme beneficiaries requires that any surplus be applied for their benefit. In particular, the value of pre-97 pensions, eroded by inflation and the absence of indexation, should be restored using the surplus.

 

Introduction- Who We Are & Who We Represent

The Pre-97 Pension Justice Alliance represents pre-97 pensioners who are members of Defined Benefits schemes of international companies.

 

• Wood Group
• Hewlett Packard Enterprise
• ST Microelectronics
• ATOS/SEMA
• AMEX
• AIG
• Pfizer
• 3M
• NCR Atleos
• Lloyds Register
• Nissan

 

 

 

We recognize that the legislation is framed for the majority of Defined Benefits pension schemes. But what about the significant minority of pensioners “left behind” – a term used frequently in the House of Lords discussion of the Pension Schemes Bill?

The Pensions Minister Torsten Bell stated in his written parliamentary answer to Neil Duncan-Jordan MP, 10 December 2025:”In private sector defined benefit pension schemes, analysis published by the Pensions Regulator indicates that, as of March 2023, around 17% of members do not receive any pre-1997 indexation on benefits.”

Our analysis does not support this figure. However, this submission seeks to explain our situation, that of the significant number of pensioners, who have not received increases to their pensions on a regular basis for up to a quarter of a century.

 

Government Position Unlikely To Create Better Outcomes For Members

The minister has stated “Our reforms will unlock some of the estimated £160 billions of surplus funds from well-funded defined benefits pension schemes, by enabling more trustees to share surplus with employers and deliver better outcomes for members.” Only time will tell how much “some” will turn out to be. But we assert, based on our experience, that it is highly unlikely to deliver “better outcomes for members”. There is nothing in the Act or the draft secondary legislation that will require a change in the established patterns of behaviour of the Sponsoring Company and the Trustee.

The minister has also stated repeatedly, “As I have said before, central to these reforms is the role of the trustees, who will remain at the heart of the decision making.” For the schemes in focus for this submission, there are serious questions about the legitimacy of the Trustee. Typically, there are no elections; the selection process has little or no transparency, there are no public minutes of meetings, communications with scheme members are one-way and generally viewed as inadequate. The Minister has publicly stated he is aware of “an imbalance of power” for some schemes. This point is especially relevant regarding changes in member benefits, which are typically reserved decisions for the Sponsoring Company.

Having trustees at the heart of the decision making is no comfort to pensioners, especially for pensioners of schemes with a Professional Corporate Sole Trustee (PCST).

Different Symptoms, Same Disease

While the pension schemes of these companies have different rules, they all share a common feature – a lack of pre-97 indexation. The long-term pattern of a lack of regular indexation and exclusion is permitted by the UK legal framework, specifically Pension Act 1995 and the recently passed Pension Schemes Act 2026.

In letters dated 6 & 7 July 2026, from Torsten Bell to Members of Parliament, the minister states “the Government recognizes that the absence of indexation on pension rights, accrued before 1997, can erode the value of pensions over time, and affect members, who rely on these benefits in retirement.” The minister does not acknowledge the context, i.e. the Bank of England Inflation Indicator since 2001 shows the cost of an item in 2001 has increased by 93.4% to June 2026. The annual average is 2.63%.

Depending on the scheme, pensioners have lost from 30 % to over 60% of the value of the pre-97 portion of their pension. This is a state sanctioned injustice which continues to affect an estimated 750,000 people and has done for almost a quarter of a century. These pensioners have a bleak outlook for their remaining years if the Government continues to permit these profitable companies to avoid improving benefits for members.

Pre-97 justice is possible. The Government must require it lest we repeat the past crimes of Robert Maxwell.

 

UK Laws and Scheme Governance Have Predominant Influence Over Outcomes

The Minister has stated “the reforms that the Government has introduced through the Pension Schemes Act of 2026 will enable more trustees of well-funded benefit schemes to share surplus with sponsoring employers, allowing them to negotiate additional benefits for members, including discretionary indexation”.

We welcome the intent of the reforms. Yet, our experience tells us that it is the system of UK laws, especially Pension Schemes Act 1995, and the schemes’ rules that influence outcomes. It is unlikely that the Pension Schemes Act 2026 will cause a change in the pattern of decision-making regarding member benefits for pre-97 pensioners. Improvements to members’ benefits are, in the majority of cases, corporate decisions taken or heavily controlled by the Sponsoring Companies, often outside the UK.

For the past quarter of a century, indexation via discretionary increases have been few and far between. Given the new legal opportunity to “extract surplus” without any legal requirement to share with members, our experience tells us it that negotiation will be futile.

We believe that unless specific firm requirements, e.g. “must”, are included in the secondary legislation, the ongoing injustice will continue for 750,000 pre-97 pensioners. A tentative framing of “could and should” or “must consider” will change little or nothing.

 

Our Views About Pensions, Surplus and Governance

The recent addition of the words “scheme members” in the title of the consultation document finally puts pensioners in the frame of reference. But the content of the draft regulations will not deliver the promised value to the scheme members of major schemes, whose members have not received regular indexation for their pre-97 service.

Pensions are for pensioners.  

Defined Benefit schemes were created to provide guaranteed retirement income, with employers accepting the financial risks in exchange for a loyal, stable workforce.  While there are secondary benefits of pensions as fiscal levers for improving the economy, the primary purpose of pensions is to provide deferred payment for past work. Over time, the central purpose for pensions has been overtaken by sponsoring company, government and industry agendas. These need to be stripped away so that pensions deliver and are seen to deliver the intended purpose for pensioners. 

Secondary Legislation Could Deliver Government Promises and Pre-97 Justice

Our view remains that DB Pension Schemes were established as deferred payment to support former employees in their retirement. In most of these schemes, contributions were made from both employers and employees.  Pre-97 pensioners contributed at the same rate as post-97 yet they do not benefit from indexation.

We want the legislation to deliver what the Minister has been promising. But that will require specific secondary legislation listed below.

1.Surplus Extraction

The current surplus of many (not all) DB schemes presents an opportunity to remove the injustice of the past and reset the functioning of DB schemes. To use the opportunity of scheme surplus, the following regulations must be included in the secondary legislation to create pre-97 pension justice –

In 2027 and without any prompt from the company or scheme members, Trustees must restore pension value to members. Trustees must –

1. Put a temporary hold on DB schemes to prevent “buy-in and buy-out” until the independent actuarial assessment required below confirms that pre-97 pension value has been fully restored.
2. Commission independent actuarial assessment of pre-97 pension erosion and future requirements for prospective indexation.
3. Ring-fence funds to restore and maintain full pension value.
4. Ensure adequate reserves are withheld to protect the scheme.
5. If any surplus is identified beyond these requirements, residual surplus should be paid to pensioners, who are the original intended beneficiaries. However, Trustees may wish to negotiate alternative solutions.
6. Ensure that pension values are assessed annually and do not erode going forward. Fiduciary duty must be expanded to include full promised pension value including indexation, and not just the amount upon retirement.

 

This should not be left solely to the negotiation of Trustees and Sponsoring companies. Secondary legislation must require sponsoring companies, not only Trustees, to agree to fund the pre-97 restoration set out above wherever scheme surplus allows it.  We know that in many cases, “companies decide and trustees administer”. This imbalance of power in the real world must be corrected by legal requirement. This should be stated as a “must” not a “should or could consider”. Pension Schemes Act 2026 mentions this but has no specific requirement for companies.

Surplus release should honour the original intended value of the pension; not the eroded amount that has been the result of non-payment of pre-97 indexation over time.

2. Scheme Governance

Governance has value only when independent processes are trusted as genuinely independent. If independent decisions can be overridden whenever the outcome becomes disadvantageous to the powerful, governance risks losing the trust of those it is meant to protect.

Given the long history of pre-97 pension injustice, the trust needs to be completely rebuilt.

A recent survey was conducted in 2025 by Patricia Kennedy of Hewlett Packard Pensioners Association (HPPA) to collect data directly from pensioners in the pre-97 Pension Justice Alliance about their level of confidence in the trustee governance. The surveys reported to the DWP Select Committee that 96.4 % of 1308 pensioners replied they were “not so confident” or “not at all confident” that their interest will be protected by their pension scheme trustee.

Secondary legislation must remove known governance weaknesses which include:

1. Lack of transparency to scheme members
2. Poor communication with members
3. Refusals to signpost links to pension associations
4. Lack of democratic process and sufficient member representation & connection especially Professional Corporate Sole Trustee governance, which by their very design can only follow the rules as determined by the company who hires them
5. Power imbalance & bias
6. Lack of open and transparent communications of all meetings and decisions
7. Lack of balanced representation of members and company
8. Lack of an independent chair elected by the members
9. Lack of annual review process to enable to enable members to assess independence of Trustees
10. Inadequate inclusion of pensioner trustees
11. Lack of published procedures for managing any risk of conflict of interest.
12. Limited scope of trustee fiduciary duties, I.e. does not include pension fairness for pre-97 pensioners.
13. Minimal independent oversight from Government (No standing reporting duty)
14. Limited scope for TPR protection for trustees
15. Ensure that Independent Professional Trustees will not be seen as conflicted or removed from the register if they refuse to support an employer application for surplus
16. Provide statutory protection from removal during, and for two years after, a surplus determination
17. Provide statutory immunity for trustees who decline to certify on prescribed grounds
18. Provide a fallback power for TPR to appoint additional trustees where existing trustees are being prevented from properly exercising their functions.

 

ANSWERS TO CONSULTATION QUESTIONS

Question 1: Draft regulation 2 defines ‘appropriate advice’. Do you agree with this definition?

No. Actuarial assessment, required prior to any actual release of surplus, should only be carried out by a Fellow of the Institute and Faculty of Actuaries

Question 2: Is the scope of the power sufficiently clear?

Clear but does not serve the purpose of the Act nor deliver natural justice

Question 3: Regulatory own funds schemes were included in the 2006 Regulations; is there a continued need for their inclusion within the Regulations?

No specific relevance for pre-97 pensioners

Question 4: Do you have any comment on the considerations of factors to be taken into account for the assessment of assets and liabilities?

As defined on page 4 above . N.B. This is the principle that an employer cannot have it both ways: it cannot rely on “no legal obligation” to withhold discretionary increases while claiming the resulting accumulated surplus as company property.

Question 5: Do you have views on the proposed funding test, based on full funding on the low dependency funding basis?

Under The Pensions Regulator guidelines, this target represents the primary objective for DB schemes to reach by the time they reach “significant maturity” (i.e., when they are near to paying out the bulk of their benefits). With 95%+ of DB schemes closed surely the vast majority have reached this level and have ‘excess’ surplus – hence the idea of surplus extraction.

Question 6: Do you have any views on the proposed payment process as proposed in the regulations, including whether it is workable in practice and sufficiently clear? Please provide details.

See page 3 “Surplus Extraction”

Question 7: Are the regulations clear on the process of obtaining actuarial certification and paying the employer within 5 working days?

Given the process detailed on page 3, a timeframe of 5 working days seems unlikely to be achievable in practice.

Question 8: Do you have any comments on the proposed 3-year forward-looking assessment in Condition 2?

3 years is realistic

Question 9: Do you agree that the process proposed in the regulations is sufficiently flexible to enable a phased release of scheme surplus over a number of years, while preserving member benefits via certification of each individual payment?

A phased release of surplus is not appropriate given the advanced age of pensioners.

Question 10: Should earmarked schemes be included in the scope of these regulations?

No specific relevance for pre-97 pensioners

Question 11: Do you think the notification requirements in regulation 11 are sufficiently clear?

The 3-month proposal is a likely to be too short. A longer notification requirement would support transparency and help engage more pensioners via pension associations.

Additional request

We would also request that an additional 11 1(d) be added:

[1]Trustee requests for improvements to members benefits must be publicly documented.

[2]Where no improvements to member benefits are awarded, the justification by the employers must be ublicly documented.

Question 12: Do you think the notification requirements in regulation 12 are sufficiently clear?

There is nothing in the draft legislation that addresses the relative bargaining power of employers and members. Our evidence is extensive whereby Trustees are structured to support the employer and to ignore scheme members.

This should not be left to negotiation. The imbalance of power between Trustees and employers is well known and has been spoken of by the Minister.

It is vital that the Pensions Regulator (TPR) is given more powers to review surplus payments at an early stage – i.e. during the 3-month period for notices to members. TPR must be able to challenge and stop decisions where members have been excluded from benefiting from surplus payments.

TPR should therefore be notified in a similar timeframe to members. As a matter of principle TPR’s recommendations should have legal force.

Question 13: Are the proposed rules for sectionalised schemes and employer consent workable and clear? Reasons for refusal to increase member benefits must be approved by TPR and publicly documented

Question 14: Are the draft regulations clear for excluded schemes? If not, where would further clarity be helpful?

No specific relevance for pre-97 pensioners

Question 15: Are the draft Regulations clear on revaluation of deferred awards?

No. The draft Regulations do not address whether the revaluation methodology applied to deferred        pre-97 awards will restore full pre-97 value, or whether it will simply carry forward the same erosion caused by decades of withheld discretionary indexation. Any deferred pre-97 award should be revalued using the same actuarial restoration standard set out on page 3. This would ensure deferred members are not left worse off than active or pensioner members for no reason other than the timing of their leaving service.

Question 16: Are the draft Regulations clear on how deferred awards affect members’ statutory right to take a transfer value?

No. There is a real risk that a member exercising their statutory right to transfer will be quoted a transfer value based on the current, devalued pre-97 award rather than the restored value sought elsewhere in this response. This would lock in the very loss this submission asks Government to correct. We would ask that transfer value quotations for pre-97 service be paused or recalculated wherever a scheme is undergoing the pre-97 restoration process set out on page 3, consistent with the temporary hold on buy-in and buy-out we have proposed. 

Question 17: Do you foresee any issues or concerns arising from proceeding without transitional provisions following the revocation of the 2006 Regulations? If so, please provide details.

No specific relevance for pre-97 pensioners

Question 18: Do you foresee any issues with revoking regulations 36 to 39 of the 2014 Regulations?

No specific relevance for pre-97 pensioners

Question 19: Does the proposed certificate in the Schedule capture all the relevant details that will be required?

As set out above, the certificate needs to capture and make public information about any non/under payment for increase to pre-1997 pensionable service pension elements – both historically and forward looking.

 

APPENDIX A: “Retrospective look at DB schemes”

Defined benefit (DB) pension schemes were established to provide workers with a secure, predictable income in retirement and to help employers recruit and retain a stable workforce. DB schemes were common after the Second World War, when long-term employment relationships were more typical.

The main reasons for establishing DB schemes were:

1. Income security: Employees were promised a pension based on their salary and length of service, rather than on investment performance. This reduced the risk that retirees would outlive their savings or suffer from poor market returns.
2. Employee recruitment and retention: A generous DB pension was a valuable employment benefit that encouraged workers to remain with the same employer for many years, reducing staff turnover.
3. Shared risk: The employer, rather than the employee, bore the investment and longevity risks. If investments underperformed or members lived longer than expected, the employer was generally responsible for funding the promised benefits.
4. Industrial relations: DB schemes formed part of the broader post-war “social contract” between employers and employees, providing financial security in return for long service and loyalty.
5. Supplementing the State Pension: State pensions were designed to provide a basic level of income. Occupational DB schemes enabled employees to maintain a standard of living closer to that enjoyed during their working lives.

For employers, DB schemes also offered tax advantages, encouraged workforce stability, and reflected a period when companies often expected to exist indefinitely and could plan pension costs over many decades.

Over time, however, increasing life expectancy, lower investment returns, stricter funding requirements, and changes in accounting standards made DB schemes much more expensive to operate. As a result, most private sector employers closed their DB schemes to new members or future accrual and replaced them with defined contribution (DC) schemes, where investment risk falls primarily on the employee.

In essence, DB schemes were created to provide guaranteed retirement income, with employers accepting the financial risks in exchange for a loyal, stable workforce.

The government’s frequently cited reason why pre-97 pension injustice cannot be changed almost always includes the word “retrospective”.

Here’s our view which we can substantiate:

1. Before the Pensions Act 1995 codified the lack of legal requirement for indexation, indexation was typically paid.
2. After the 1995 Act, actuarial evidence shows that funds were significantly decreased to fit the new picture of required liabilities, i.e. no longer required to pay indexation for pensionable service before 1997.
3. Discretionary payments previously used to compensate for indexation stopped or become infrequent without explanation.
4. Huge ‘retrospective’ benefits arose when;

– indexation was reduced from 5% to 2.5% by dint of the 2004 Act effective April 2005 and

– when DB schemes started to be closed to new members/accruals from around 2010 and fund              liabilities swung from ensuring a final salary pension to the member who now bears the risk                     under DC schemes.

In conclusion, we know that a decision made over 30 years ago had life altering impact on more than the estimated 750,000 pre-97 pensioners today. Many pensioners have passed away without justice since the 1995 Act came into effect.  Their beneficiaries are affected by the injustice still.

It seems a safe assumption that the government did not imagine that world-leading companies, frequently cited for their leadership and ethics, would use this decision to legally shortchange their pensioners for 30 years. Yet that is exactly what has happened, i.e. enhancing their financial position in the eyes of their shareholders.

Big powerful companies have saved huge amounts of money at the expense of their pensioners.

And successive administrations have refused to change this by claiming it would be a retrospective change, while simultaneously recognizing that pension funds have an estimated surplus of £160bn.