CBI responds to DWP’s consultation on the new Defined Benefit (DB) pensions funding framework seeking a more flexible approach.
The Department for Work and Pensions (DWP) recently consulted on regulations underpinning a new funding framework for Defined Benefit (DB) pensions.
What do employers think of the proposals?
The principles behind the revised funding regime are good. Previous business failures showed that there are still a minority of cases where the payment of final pensions is not being properly planned for. DWP is right to require DB pension schemes to think about the long-term and to have a funding and investment strategy in place.
As proposed however the regulations are not targeted towards just these outlier cases. Instead, they will act as a funding straitjacket across the DB pensions market that will drain funding from corporate sponsors and push schemes to divest of growth assets. Mercer estimate that £200bn of liabilities could be added to sponsor balance sheets because of the new regime over the next 10-15 years.
This money will have to come from somewher
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