Considering the future of the defined benefit sector

It is testament to the effective action of the regulator, and I hope it has provided reassurance to the 19,000 people who are relying on the scheme for all or part of their pension.

While the BHS case shows the effectiveness of the current system, we are not complacent, and consumer confidence in these schemes has suffered a blow.

There are around 11m members of defined benefit pension schemes, and it is right that we look at the sustainability and future of these schemes.

^{Podcast: Pensions minister Richard Harrington talks to Pensions Expert}

To that end we launched a green paper asking for views and suggestions on measures to help secure the future of the DB sector and restore confidence.

We want to hear from consumers, employers and the pensions industry about which protections or support should be put in place.

This includes the role of the regulator and whether its powers need to be strengthened or increased to allow it to act quickly when necessary.

Considering a superfunds solution

Alongside the powers of the regulator I am also aware that we need to look at the security of some of the smaller DB schemes out there.

Smaller schemes may lack opportunities to access sophisticated advice and investment strategies; they are more vulnerable to the markets; and, as members diminish, they could become less sustainable.

An option I am keen to consider is that of the ‘superfund’ for small schemes and how they might come together to provide better value to members and, crucially, a greater level of security.

It is also important to consider how things have changed since these schemes were first set up. Investment markets have become more complex, and more globalised.

It is in that context that trustees have to make critical decisions and seek the right balance between risks and rewards.

That is why I also think it is important to have a debate about whether more can be done to support effective decision-making and to get the very best outcomes from these schemes – for members, for sponsors and for the economy as a whole.

To restore confidence and build a more secure sector, it is vital that the interests of no one group dominates and that we build a system that works for all.

I hope many readers will be submitting their views to the green paper, and I look forward to updating you on our progress in this area.

The green paper will be open for another four weeks and more information can be found at https://getinvolved.dwp.gov.uk/pensions/db-pensions-green-paper/

Richard Harrington is the minister for pensions