White paper outlines pensions victory for workers

In what is a victory for workplace pension savers, the Government has announced that it will drop plans to allow struggling companies to change the way payments are increased each year.

Under previously proposed plans, it was suggested that companies with large pension deficits could temporarily suspend rises in line with inflation, at the expense of scheme members.

The move could have ceased rises altogether, meaning pensioners would be forced to battle inflation and the rising cost of living on their own.

The Government had also considered making changes – albeit less extreme – by letting schemes switch to increasing payments in line with the Consumer Price Index (CPI), which increases slower compared to the currently used Retail price Index (RPI).

But a recent white paper has ruled out both options, according to the Telegraph newspaper.

“We have concluded that we cannot accept any reduction in the value of member benefits,” it said.

“Any across-the-board change would allow sponsoring employers to reduce their liabilities at members’ expense even if the employer had no difficulties in meeting their existing liabilities.”

The paper has also looked at punishing bosses who neglect their pension responsibilities. This included fines or prosecuting employers who put pensions at risk by selling companies or trading at the expense of schemes.

The news following several high profile collapses, including the likes of BHS, which went under last year with a pensions deficit of a reported £571 million.