"We look forward to working collaboratively with the DWP and industry to establish the best design for a public-sector consolidator that delivers the government's objectives," said Katherine Easter, interim CEO of the PPF. "The proposed consolidator would maintain the security of members' benefits, give more choice to schemes and, dependent on scale, invest materially more in assets which support the wider U.K. economy and U.K. gilt market."
The DWP report follows from the Mansion House Compact proposed reforms announced in July and named for the location in which the speech was held. Mansion House proposals include defined contribution plans committing to investing 5% of their default funds into private U.K. companies by 2030, and 10% from defined benefit funds.
"The suggestion of a 'statutory override' to make sure that all DB schemes in robust financial health could explore options around surplus extraction is a very positive one," said Steve Webb, partner at consultant Lane Clark & Peacock and former U.K. pensions minister. "But with regard to surplus extraction, we do not believe many trustees would be reassured if the only safeguard for members before money could be taken out was that the scheme was currently well funded. Our proposal for full PPF cover, backed by a new PPF super-levy, would give trustees comfort that member benefits were fully protected regardless of what happened to the sponsoring employer in the future."
Most of the consultation responses that expressed concern suggested that participant benefits could be at risk as a result of the proposals. The DWP release stressed that this is not the case as participant benefits are guaranteed in statute and are unaffected by the performance of any LGPS fund.
