14 July 2023

The Department for Work and Pensions (DWP) has opened the new consultation ‘Options for Defined Benefit schemes: a call for evidence’, on 11 July 2023. This is a call for evidence to support the development of innovative policy options to increase protection for DB members while supporting wider economic initiatives.

As part of the government’s policy to promote economic growth, the DWP wants to build an evidence base around how DB pension schemes could increase the amount invested in productive asset classes. DWP want to do this while maintaining appropriate security of the benefits promised, not undermining the fiduciary duties of trustees and maintaining the stability of the gilt market.

This also includes exploring the prospect of more investment that provides equity capital and finance for businesses in the UK. Such as, start-ups, infrastructure and private equity, as well as longer-term investments, typically in illiquid assets. This has been generically termed investing in ‘productive finance’.

The DWP would like to hear from the pensions industry, especially DB schemes and their sponsoring employers, and other stakeholders who can offer an informed perspective on how DB schemes engage with ‘productive finance’ in practice and how that could change. This consultation closes on 5 September 2023.

Laura Trott MP, Minister for Pensions, said:

‘‘DB schemes are great for members as they provide a secure income in retirement,  but to do so they hold assets worth around £1.7 trillion. Several suggestions have  been made as to how this money could be used more flexibly to benefit pension scheme members and the wider economy.

We want to offer sponsoring employers and scheme trustees more choices going forward. This could include more consolidation options or more choices in how they invest DB assets and help them to generate greater surpluses.

We are keen to explore some of the ideas which suggest ways in which sponsoring employers and DB scheme trustees can invest differently, and the choices we could offer to help them to do this. Please consider responding to this call for evidence on whether there is scope to enable greater flexibility in how DB pension scheme assets are invested with the potential to work harder for members, employers and the economy.’’

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