Allowing schemes to suspend inflation-linked pension increases is one of the options the UK parliamentary Work and Pensions select committee would consider as part of its broad inquiry into defined benefit (DB) pensions, according to a spokesman.
He was confirming reporting by the Financial Times, which interviewed the committee chair, Frank Field.
It reported Field as saying that the committee would look at what was needed to “help create a climate of opinion so scheme trustees would naturally think about introducing flexibility on benefits”, mainly on inflation-matching increases.
The spokesman for the committee confirmed that suspending inflation-linked increases was “something it would look at” but said it would be compared with “various other options” and that it was “still far from being anywhere near a formal recommendation by the committee”.
He said the committee was about halfway through the process of going through written evidence but had yet to begin oral evidence sessions, which were of “quite high” importance.
In August, the work and pensions committee announced that it was expanding its inquiry into the Pension Protection Fund and pension regulation, which spanned the collapse of UK high street retailer BHS, to focus on DB pension schemes more broadly.
The scope of the inquiry is large, with the committee having invited written submissions on aspects such as the relationships between The Pensions Regulator (TPR), the Pension Protection Fund, trustees and sponsoring employers, and “the balance between meeting pension obligations and ensuring the ongoing viability of sponsoring employers”.
The deadline for written submissions closed just over a week ago, with the oral evidence sessions due to start towards the middle of this month.
These are scheduled to last until around the end of November.
The committee would then consider this evidence in December, with a view to publishing a report with its recommendations in January, according to the committee spokesman.
The committee’s inquiry both reflects and is part of an intense debate about the viability of the DB system in the UK in light of high deficits, although these, or at least their interpretation, are also contested.