WPC to turn attention to pension treatment in cases of corporate failure

The Work and Pensions Committee (WPC) is expected to take a closer look at the treatment of pensions in instances of corporate failure, following the conclusion of its current three-part inquiry into pension freedoms later this year.

Speaking at an Association of British Insurers (ABI) event, WPC chair, Stephen Timms, confirmed that the committee is expected to publish the report on its current inquiry “after the summer”, which will conclude its broader inquiry into pension freedoms.

Following this, Timms suggested that the committee will undertake further work to consider the specific issue as to what is happening to pensions in instances of corporate failure, noting that there has been "a number of high-profile examples" of this in recent years.

"We want to look at what is supposed to happen and what's actually happening in these cases, and whether any changes are required as a result of that," he explained. "That would be the next pension inquiry that I'm envisaging us undertaking."

Timms also said that the question of a future pension commission has been a key theme during the WPC's current inquiry, suggesting that there could be scope for a more “fundamental exercise” to establish a new consensus amid the rapid changes seen in recent years, such as developments in the gig economy.

However, Timms acknowledged that there are concerns that a “fundamental rethink” could prompt a delay around issues that should be “urgently dealt with”, such as problems facing self-employed pension saving.

Timms suggested that the creation of a new Office for Pensions Responsibility, modelled on the Office for Budget Responsibility, could be one alternative approach to a pensions commission, which could “build and maintain a good evidence base for pension policy and explain the trade-offs of different policy options”.

More broadly, Timms agreed with recent industry calls for the government to take action on auto-enrolment reforms, arguing that "we need to look at how we can raise the amount of what's been contributed into auto-enrolment".

Reflecting on the specific calls for the government to outline a roadmap or timeline for auto-enrolment changes, Timms argued that "what we need is a plan and a timetable, and we don't have those yet".

"Of course, it's understandable that in a time of a quite serious cost of living crisis, the government is cautious about saying that employees and employers are going to need to pay more, and I think everybody understands that," he continued.

"But what we do need is certainty around the timing. Clearly It's not gonna happen overnight, there will no doubt be a phasing-in in the plan, but we do need a plan and we need that quickly."

Timms also argued that whilst there are lots of issues facing employers at the moment, action is nonetheless needed and the industry will need to "grit its teeth" to make the changes work, emphasising that time to prepare will be key given the current backdrop.

He stated: "There are lots of unwanted cost rises that employers are facing and lots of difficulties, not least in recruitment, and I'm sure many employers would feel that the very last thing they need is to be required to pay more in in pension contributions.

"Equally I think the employers recognise that something has to be done, we cannot sleep walk into a situation where millions of people have got inadequate retirement incomes.

"Something has to be done, and it's likely to have to be done in a quite difficult economic backdrop, the one that we're in at the moment.

"Employers need plenty of notice of where this is going to happen, what the steps on the way to it are going to be and when they are going to take place, so that they've got ample time to arrange and to work out, what are the implications for future pay policy, as a result of these changes."

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