With more DB schemes approaching maturity, and their sponsoring employers seeking to secure members’ benefits or transfer risk, the Government is persuaded that there is “a space that new commercial consolidators could fill”. Under this model, a private company could set up a new DB scheme, and take over the responsibility for meeting the liabilities of other pension schemes, in return for a one-off or structured set of payments from the previous sponsoring employer; the covenant being provided by additional capital supplied by external investors. The Government is to consult on a legislative framework and authorisation and accreditation regimes to enable consolidation whilst retaining member protection.

Next steps

There is no proposal for an RPI/CPI “statutory override” for now, and no changes to the employer debt legislation, although these issues are unlikely to be gone forever. In particular, the Government says it will continue to monitor developments in the use of inflation indices. There will be a “phased delivery” of the White Paper’s proposed changes, with consultations on key areas during 2018/2019 to ensure the industry gets a say in the shape of the future.

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