Industry experts have emphasised that open defined benefit (DB) pension schemes are “not a novelty”, stressing the need for a regulatory environment that allows open DB to thrive.

Speaking at the PLSA Annual Conference 2023, USS chief executive, Carol Young, noted industry interest in open DB schemes, given the high turnout at a conference session on the case for re-opening DB schemes, arguing that even if this doesn’t come about, “open DB is not a novelty”.

“It’s still a core part of the retirement provision for hundreds of thousands, if not millions, of people,” she continued.

“So we need regulation that allows open DB to thrive, and I'm delighted about the engagement that we've been able to have with the regulator on this point."

However, Young acknowledged that there are currently some regulatory tensions causing concern, explaining that the draft DB Funding Code and the intent behind Mansion House “feels like it's pulling you in a couple of different directions”.

However, she argued that, as well as greater consolidation in defined contribution (DC) schemes, maintaining open DB schemes makes the ambitions of Mansion House more likely to be realised.

"Open DB can provide long-term patient capital," she explained. "It can take a decade long view that can be a win/win around innovation and critical infrastructure, and so I really hope that the regulatory environment allows for that and lets that drive."

The USS also previously wrote to The Pensions Regulator to call for better regulation for open DB schemes in the DB Funding Code.

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