Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment she has made of the potential merits of providing indexation of pension rights accrued before April 1997.

It is for sponsoring employers to decide what pension benefits they offer, provided these meet minimum standards. These benefits are set out in the scheme rules. 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 from the sponsoring employer, and could ultimately threaten the future viability of some schemes.

It is 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.