Richard Harrington has said he has no objection to giving trustees the right to change indexation in rare cases, as long as members are protected against higher living costs.
Appearing before the Work and Pensions Select Committee on 23 November for the first time as pension minister, he also warned against making indexation changes just because it suits employers.
He is concerned changes on a large scale could result in people thinking they have been "fiddled" and further damage the credibility of pensions.
It comes as the Department for Work and Pensions (DWP) will soon be publishing a green paper on defined benefit (DB) pensions, which will look at a wide range of issues to see if major changes to the system are necessary.
Harrington was asked by MPs what government could do to make things a bit easier for business, such as allowing schemes to use the Consumer Price Index (CPI) rather than the generally higher Retail Price Index (RPI).
He replied that while a DB scheme is a commitment and not an optional service charge on a bill, he said he had been "surprised to find what a difference indexation makes.
"When I looked at the numbers, the difference is very significant."
While some schemes have been able to switch annual pension increases linked to RPI since the government moved statutory increases to CPI in 2011, most have been unable to due to RPI being hardwired in their scheme rules. This has raised debate over whether there should be a statutory override to allow schemes to ditch RPI, or introduce conditional indexation where troubled sponsors could halt increases for a short time.
Harrington said it is important to remember these clauses were put in to protect against costs of living.
He said: "In principle I have no objection to giving trustees the right to change the indexation, as long as consumers' pensions are protected for what was intended, which was to protect against rises in prices."
"It may be government looks at a different method of calculation to reflect the change in people's lives," he added. "Things do change, or food gets disproportionally more expensive… and then government can decide to change the system."
However, he cautioned against changing pensions "just like ‘that'", and said:
"One thing does concern me - on a point of principle - that the credibility of pensions in people's minds means that you force a change in the scheme rules, or even the government gets involved, in very rare cases, because we don't want to undermine the principle of trust in pensions again. We don't want people to think they've been fiddled."
Harrington also said the green paper should come out sometime in the winter, and that in his view anything is on the table.
He wants it to be more than "just another consultative document" and is keen for government to lead on the issue, although it must be comprehensive of the issues people have raised.
"I don't want it to be another ‘kicking the can down the road' - it's down to DWP to get to grips with."
The green paper will address a number of areas such as the regulator's powers, the valuation system and how to address the fragmentation of DB schemes.
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