MPs launch inquiry into DB schemes following BHS collapse

Frank Field MP

MPs are to launch a new inquiry into the sustainability of thousands of defined benefit schemes as the BHS and Tata Steel scandals draws attention to occupational plans.

Committee chair Frank Field has branded the DB funding crisis “one of the great problems of this age”.

The Work and Pensions Committee has been grilling trustees, the Pensions Regulator and previous owner Sir Philip Green over the handling of BHS’s staff pension scheme.

Now the BBC reports the committee will expand its investigation to include the DB market. There are roughly 6,000 plans, the majority of which are in deficit. The only remaining open schemes are in the public sector.

The Government has proposed changing how members of the scheme have their pensions increased, from using RPI inflation to the normally lower CPI inflation.

Field says: “The state of the British Steel pension scheme is further worrying evidence of a wider danger to one of the biggest savings successes in Britain during the last century – occupational pension schemes.

He adds: “The select committees’ in-depth case study on BHS is illustrating how such schemes are already creaking from rising life expectancy and record low returns on capital.

“Pension law and regulation must urgently adapt to the issues of the future, rather than the problems of the past. The whole savings edifice is in danger.”

Field says: “This will be a major inquiry considering radical solutions to one of the great problems of this age.

“The inquiry will consider, amongst other things, radical solutions that could be more easily implemented if real returns on capital rise again.”