Pre-1997 Pensions: Discretionary Increases

Nia Griffith Excerpts

Thursday 19th March 2026 Commons Chamber

[Luke Akehurst]

I have had written communications and met with constituents who used to work alongside my hon. Friend’s constituents at Nissan. Sadly, in the case of Nissan and countless others, trustees have proven themselves not to be accountable enough for the decisions that affect those holding pensions. Evidence submitted to the Pensions Ombudsman shows multiple cases in which trustees have not even considered key factors when deciding discretionary increases.

[Dame Nia Griffith (Llanelli) (Lab)]

I congratulate my hon. Friend on securing this debate and on clearly laying out the injustice. Does he have concerns, as I do, that the make-up of the trustee boards means that the company is in control? That is either because the trustees are current employees and their promotion will depend on the company or because they have been appointed specifically by the company. Therefore, even where trustees vote unanimously for a rise, as in the case of 3M, it can be blocked by the company. That has happened for successive years with these companies.

[Luke Akehurst]

I absolutely share that concern. My understanding from the constituent I met is that Nissan’s trustees include a majority of company appointees who outvote the trustees representing the members of the scheme. Key factors have been ignored, from ignoring inflation to overlooking member contributions. For that reason, I believe that statutory intervention is urgently required.

--- Later in debate ---

[Torsten Bell]

I will come in a second to the point that the right hon. Gentleman is making, which is about where power lies in the system.

[Dame Nia Griffith]

I thank the Minister for his time in meeting us in Swansea, as well as the time he has spent on this topic here in the House. He mentions the disadvantages of making any sort of blanket legislation, but does he not agree that there are ways we can caveat that, such as applying it when the scheme is in surplus? Does he not recognise that most of these schemes were paying increases until they stopped, either because of financial crisis or because they realised they did not have to? There are options that could be explored. Would he be willing to do that?

[Torsten Bell]

My hon. Friend has been a powerful campaigner on this issue. I recognise her point about situations where there was a habit of paying discretionary increases in the past. On the question of what we do about it, let me come to the Government’s approach, and then I will perhaps offer two reflections specifically on the points that have been raised on which we might want to continue making progress, even if I cannot satisfy all the demands for instantaneous change today.

So, what are we doing? The reforms introduced in the Pension Schemes Bill will give more trustees of such schemes the flexibility to release surplus. That will help shape the balance of power between trustees and employers when it comes to well-funded schemes. There is not nothing we can do, and the Pension Schemes Bill will make a difference, particularly for the kind of schemes being raised tonight—those which have a surplus today.

The decision to release surplus will remain entirely with the trustees. That will place them in a better position to negotiate benefit improvements as part of any release. It is entirely for trustees, working with the employer, to determine how members may benefit. Let me be really clear: if trustees wish to insist on discretionary pre-1997 indexation as a condition for surplus release, they will be entitled to do so. I expect that many will, given the discussions I have had with them. We are obviously in the early stages of that Bill; it has not passed through Parliament yet. Employers and trustees are thinking through a world where they suddenly find themselves with a surplus, and in many cases are thinking about what that means for the future of their pension scheme. These reforms recognise trustees’ and members’ understandable frustration with the status quo, but also the diverse circumstances of DB schemes.

Let me end with two reflections on the wider contributions that Members have made, particularly my hon. Friend the Member for North Durham, who has brought us here today. First, whatever the scheme rules, there is no excuse for employers not to fully engage with trustees on these decisions and questions, and I have too often heard from members and trustees that employers have not done so. I will take that away to consider what more we can do to make sure there is an open consultation and people are clear about what is going on and how decisions are taken.

Secondly, given the importance of this matter, I recognise that it would be beneficial to develop a clearer understanding of the circumstances, particularly in relation to the issue that has been raised about well-funded schemes are choosing actively not to award discretionary increases, particularly where employer consent is the binding constraint. The Pensions Regulator has been considering how to build its evidence base in this area, and I will talk to it in the weeks and months ahead about what more we can do about that.

I will finish by paying tribute to my hon. Friend and the other right hon. and hon. Members who have participated in this debate, but also to Members who are not here, but have consistently raised this issue with me. In the coming weeks, I will be meeting other Members who have asked me to discuss this with them and their constituents. It is important that we have the chance to discuss these important matters, and I am glad that we have done so.

Question put and agreed to.