Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if he will bring forward legislative proposals to give pension scheme trustees the authority to award discretionary increases to those already claiming a pension.

Discretionary indexation is over and above the statutory requirements. This discretion is usually exercised by the trustees with the agreement of the sponsoring employer. Some schemes have previously paid discretionary increases on a regular basis. However, these increases are not part of the pension package promised.

The precise design of pension benefits is a matter for employers and trustees and is not covered in the Department for Work and Pensions legislation. Pension scheme rules are many and varied and must remain a matter for employers and scheme trustees to decide.

The Pension Schemes Bill makes changes so that more trustees of well-funded schemes have the flexibility to share their scheme surplus with employers, subject to strict funding safeguards for members. Scheme trustees are required to act in the interest of scheme beneficiaries, and working with sponsoring employers, will be responsible for decisions on the release of surplus. Together they will agree how members can benefit from any release of surplus, which could include discretionary benefit increases.

The Pensions Regulator already expects that trustees be aware of members who would benefit from any decision to award a discretionary increase and whether the scheme has a history of making such awards.