The government will not legislate to allow pension schemes to retrospectively apply integration, also known as ‘clawback’, the controversial practice which allows schemes to reduce member payments once they reach state pension age.

In its response to a consultation published yesterday, 24 April, the Department for Work and Pensions (DWP) said while it agreed there is an argument for retrospection, the primary legislation under which the original order was made does not allow for retrospective legislation to be made.

In January, the DWP launched the consultation in the hope of “tidying up” the way schemes operate integration, enabling schemes to apply a reduction to members’ pension payments once the member has reached the relevant new state pension age, without breaching equality requirements.

Following an increase in state pension age on 6 December 2018 to beyond 65 for both men and women, the current clawback system is ineffective.

Last November, a group of cross-party MPs teamed up with Unite to "demand justice" clawback, arguing that it “disproportionally affects the lowest paid”.

In 2017, Pensions Minister Guy Opperman said the government has no plans to legislate to compel schemes to withdraw an integration arrangement, also known as a clawback scheme.

“It is a decision for employers and trustees to operate ‘clawback’ or ’integrated’ pension scheme arrangements,” Opperman said.

Opperman has previously said that compelling schemes to withdraw a clawback scheme would amount to a retrospective change that would impose significant additional unplanned costs on schemes.

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