MPs to hear evidence from members, trustees, and TPR on pre-97 indexation

Representatives of former Hewlett-Packard, BP, and American Express workers, as well as the Trades Union Congress, will appear before the Work and Pensions Committee as it looks into the issues of discretionary payments and indexation.

Fiona Frobisher, head of policy at the Pensions Regulator (TPR) and Julian Lyne, the regulator’s interim executive director for market oversight, will also give evidence to the committee.

Another session will involve: Maggie Rodgers, co-chair of the Association of Member Nominated Trustees; Hywel Robinson, a lawyer from Temple Bright; Harus Rai, a professional trustee and managing director at Capital Cranfield; and Jon Forsyth, chair of the Society of Pension Professionals’ DB committee.

Those with DB pensions accrued before 1997 do not receive statutory indexation and are dependent on discretionary increases granted by their scheme’s trustees. Many have seen the buying power of their pensions eroded substantially by inflation. 

In the case of BP, meanwhile, pensioners have voiced their opposition to the decision to stop granting discretionary benefit uplifts despite the pension scheme recording a surplus of £4.7bn at the end of December 2024.

The BP Pensioner Group recently criticised the trustees of the oil giant’s £18.6bn pension scheme after the announcement of a £1.6bn buy-in with Legal & General.

The Department for Work and Pensions has previously stated its intention to work with TPR to better understand how pension schemes treat members with pre-97 benefits.

Liberal Democrat MPs last month attempted to insert an amendment to the Pension Schemes Bill that would have placed pre-97 indexation on a statutory footing by requiring DB pension scheme trustees to consider these members when weighing up how to use surplus capital.

However, pensions minister Torsten Bell insisted that the amendment “would not work”. While he has promised to continue to consider the issue, he did not present an alternative during the committee’s debates.

Plaid Cymru MP Ann Davies has tabled a similar amendment for consideration at the bill’s report stage, as MPs continue to push for change.

FAS members left in limbo after amendment rejected

The oral evidence session is focused only on corporate DB pension schemes, and will not consider the plight of members of the Financial Assistance Scheme (FAS), who also do not receive indexation on their pensions.

FAS caters for people with DB pensions whose companies went insolvent before the establishment of the Pension Protection Fund (PPF). Although functionally separate from the PPF, FAS is overseen by the lifeboat fund and members have been campaigning for its substantial reserves to be used to restore indexation.

In addition, the PPF is open to such a move and has worked with FAS members on various options for how indexation could be introduced.

However, the pensions minister again quashed an amendment aimed at introducing indexation for FAS members during the committee stage of the Pension Schemes Bill.

Since the committee stage concluded, the Pensions Action Group – which represents FAS members – has written to Torsten Bell asking for clarification about future action, but has yet to receive a response.

Steve Darling, Liberal Democrat MP for Torbay, has tabled an amendment on indexation for FAS and PPF members that will be considered at the Pension Schemes Bill’s report stage.