Proposals in the defined benefit white paper have been welcomed by the industry, but slow implementation and practicality issues will leave pensions “at risk”, it has been said.

Commenting on Protecting Defined Benefit Pension Schemes, released by the Department for Work and Pensions (DWP) today, 19 March 2018, the Work and Pensions Committee said that the legislation will not happen before 2019 or 2020 at the earliest, meaning “pension rights are still at risk from unscrupulous businesses seeking to avoid their pension obligations”.

In the white paper, the DWP outlined plans to criminalise wilful pension scheme neglect through giving The Pensions Regulator more powers, but has been criticised by some as a “missed opportunity” in other areas such as helping struggling schemes with pensions liabilities.

Committee chair, Frank Field, said: “I very much welcome the announcements of new powers called for by the Committee. But for these measures to be an effective deterrent to the minority of employers wanting to shirk their pension obligations, there has to be a credible threat of them being deployed in full and at speed.

“This has been the problem with existing pension regulation powers, which laid largely dormant while the pension schemes at BHS and Carillion unravelled, with who knows how many more like them still waiting in the wings.”

Royal London director of policy Steve Webb agrees, saying the measures look worryingly slow and that “legislation appears to be years away”, while also highlighting the difficulty of the legislation in practice.

Webb said: “Clamping down on employers who wilfully under-fund their pension schemes will obviously be a popular measure. But proving that someone has wilfully or recklessly failed to fund their company pension is likely to be extremely difficult, and company bosses are likely to have good lawyers. There is a risk that this is simply ‘gesture legislation’ which will never be used in practice.

“It looks as though the government’s desire not to interfere in business transactions has taken priority over the desire to protect pensions.

“All in all, there is little in this paper that offers reassurance that we will not be reading about another Carillion or another BHS in the months and years to come.”

In addition, a number of industry commentators have suggested the importance of many of the large schemes to the economy will likely result in a lack of action.

AJ Bell senior analyst, Tom Selby, said: “While there has been much rhetoric from Prime Minister Theresa May about the government getting tough on company bosses who shirk their responsibilities to DB pension scheme members, this is the greenest of green papers.

“There are reasons for the government’s reticence in taking the hammer to firms sponsoring DB schemes. These companies are central to the UK economy, employing hundreds of thousands of people across all manner of sectors.”

Elsewhere, Association of Consulting Actuaries chairman Bob Scott is disappointed at a lack of measures to help employers struggling with pension scheme liabilities.

He said: “We are disappointed that no new relief to employers struggling with DB liabilities appears to be proposed. Our survey of employers conducted last year found this was needed if more employers are not to abandon DB provision.”

TUC general secretary, Frances O’Grady, agrees: “This is a missed opportunity to build a pensions system that’s fit for the future. It’s good that employers won't be able to slash pension rises without members’ consent. But ministers are doing nothing to stop the closure of good-quality pension schemes.

Furthermore, Ashurst pensions council John Gordon believes that some of the white paper suggestion will “concern companies”.

Gordon said: “Employers may also be concerned at the regulator's proposed new powers to call people in for interview, and to go through electronic devices in search of relevant information. Whether the changes set out in the white paper will address the problems some see as hampering the current pensions regulatory regime remains to be seen."

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