MPs are to investigate how many occupational pension schemes are at risk of failing, amid inquiries into the collapse of BHS and the debate over the future of the £15bn British Steel pension fund.
The Commons work and pensions select committee, which is already investigating the £571m deficit at BHS scheme, said on Friday night it would launch a wide ranging inquiry into the problem, probably starting in the autumn.
Workers’ occupational pensions have been forced centre stage in recent months by BHS’s collapse and by Tata Steel’s potential sale of its UK business.
Almost 13,000 current and former BHS employees who were under retirement age when the company went into administration in March may face a 10% cut to their pensions as a result.
The British Steel pension scheme, one of Britain’s largest defined benefit plans with 130,000 members, is also facing cuts as the government races to put it on a sound footing to help facilitate a sale. The latest figures show it has liabilities of almost £15bn and the deficit has ballooned to £700m.
Announcing the broader inquiry, the chair of the committee, Frank Field, said: “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. The select committee’s 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. We should be under no illusions that British Steel is a special case. The whole savings edifice is in danger.”
The Labour MP said 11 million workers have private defined benefit pensions, but more than 5,000 of the associated pension schemes are in deficit by £805bn overall.
“This will be a major inquiry considering radical solutions to one of the great problems of this age,” headded.
Last week the committee joined forces with the business, innovation and skills committee to question the heads of the Pension Protection Fund and the Pensions Regulator about the BHS debacle.
In the coming weeks, the committees will be offering some of the best free theatre in London when on 8 June they quiz senior BHS managers and Dominic Chappell, the former bankrupt who controversially bought the department store chain for £1 from Sir Phillip Green, who will be appearing a week later.
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