DB ‘gold-plating’ at expense of majority

Linklaters partner Rosalind Knowles said many pensions schemes had hoped to benefit from new deregulation rules – but noted it had largely been a “missed opportunity”.

Knowles said pensions reform minister Mike O’Brien had told employers he wanted employers with good schemes to continue – but the Pensions Bill had done little to help them.

She said that, while personal accounts took up the first 85 clauses of the Bill, only two clauses had been devoted to deregulation – the abolition of safeguarded rights and capping revaluation for future accrual at 2.5pc.

And she feared many of the proposals for reducing the burden on defined benefit schemes had been “kicked into the long grass”.

Knowles explained modification of section 67 rules, which restricts how schemes can amend a member’s past service rights, was being kept under review – and she said the government was continuing work on risk-sharing and principles based legislation.

She added that other proposals – such as removing the continued requirement for limited price inflation of 2.5pc – were ruled out as “not striking the right balance between employer concerns and member protection”.

And Knowles noted the government had also added to the burden of providing schemes in the Pensions Bill – introducing interest charges on late levy payments; giving The Pensions Regulator powers to intervene if it appeared non-prudent actuarial methods were used; and allowing the regulator to appoint trustees where “reasonable”.

Knowles said: “What we see with the Pensions Bill and the government’s response to the deregulatory review is that the government is quick to regulate but seems painfully slow at doing the opposite.”