Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if she will take steps to address the lack of statutory inflation protection for pre-1997 defined benefit pension entitlements.

It is for sponsoring employers to decide on what pension benefits they offer, provided they meet minimum standards. Scheme rules set out how the scheme should be run. It would not be appropriate for the Government to interfere in decisions made by individual schemes, beyond setting clear, affordable minimum standards that apply to all.

Pensions legislation does not usually apply new provisions retrospectively to rights that have already been accrued. It is generally seen to be unreasonable to add liabilities to pension schemes that could not have been taken into account in the funding assumptions that determined the contributions to be paid at the time. In some cases, the additional unplanned liabilities could result in significant additional contributions for the sponsoring employers, and ultimately threaten the future viability of some schemes.

It is extremely important to achieve a balance between providing members with some measure of protection against inflation and not increasing schemes’ costs beyond a level that schemes and employers can generally afford.